INDIA IN FIGURES 2012

Employment to Tribals

National Scheduled Tribes Finance and Development Corporation (NSTFDC) has signed refinance agreements with National Cooperative Development Corporation (NCDC), seven Public Sector Banks namely State Bank of India, Central Bank of India, Syndicate Bank, Dena Bank, Vijaya Bank, Union Bank of India and UCO Bank; and seven Regional Rural Banks namely Assam Gramin Vikash Bank (Assam), Baitarani Gramya Bank (Odisha), Vananchal Gramin Bank (Jharkhand), Tripura Gramin Bank (Tripura), Baroda Gujarat Gramin Bank (Gujarat), Dena Gujarat Gramin Bank (Gujarat) and Sharda Gramin Bank (Madhya Pradesh) for providing concessional loan to the people belonging to the Scheduled Tribes (ST) community for enhancing their self employment opportunities.

The terms and conditions of the said agreements, inter-alia, include implementation of schemes by Banks/ NCDC in line with the lending norms of NSTFDC, timely repayment, arbitration mechanism, etc. NSTFDC has launched a scheme for facilitating professional and technical education including Ph.D. in India among tribals. Under the scheme titled “Adivasi Shiksha Rrinn Yojana (ASRY)”, loan up to Rs 5.00 lakh can be provided covering expenses towards fees, books, computer, study tours, boarding & lodging, etc. The interest chargeable is @ 6% p.a. Interest subsidy is available for the moratorium period. About 1.5 lakh people belonging to the Scheduled Tribes have benefited from the above mentioned agreements and ASRY up to 31.08.2012. Details of activites of NSTFDC is given below:

National Scheduled Tribes Finance and Development Corporation (NSTFDC), under the Ministry of Tribal Affairs, implements schemes for self-employment of Scheduled Tribes. Under the schemes, NSTFDC provides concessional financial assistance to individuals or groups of STs for undertaking Income Generating Activities.

The salient features of the major schemes of NSTFDC are:

• Term Loan scheme: NSTFDC provides Term Loan for viable projects costing up to Rs 10.00 lakh per unit. The financial assistance is extended up to 90% of the cost of the project and the balance is met by way of subsidy/ promoter`s contribution/ margin money. The interest rate chargeable is 6% p.a. for loan up to Rs 5.00 lakh and 8% p.a. for loan exceeding Rs 5.00 lakh.

• Adivasi Mahila Sashaktikaran Yojana (AMSY): This is an exclusive scheme for economic development of Scheduled Tribes women. Loans up to 90% for projects costing up to Rs 50,000/- are provided at highly concessional interest rate of 4% p.a.

• Micro Credit Scheme for Self Help Groups: The Corporation provides loans up to Rs 35,000/- per member and Rs 5.00 lakh per Self Help Group (SHG). The interest rate chargeable is 6% p.a.

• Assistance to TRIFED empanelled Artisans: NSTFDC provides concessional finance to tribal artisans empanelled with TRIFED towards working capital and purchase of project related assets. Financial assistance is provided up to Rs 50,000/- to individuals and up to Rs 5.00 lakh to SHGs (with a ceiling of Rs 35,000/- per member) and cooperative societies. The interest rate chargeable is 4% p.a. from ST women and 6% p.a. from SHGs and others.

Per Capita Income of Tribals

As per information received from the Ministry of Statistics and Programme Implementation, social group-wise per capita income is not maintained. However, State-wise percentage of population below poverty line (social group-wise) is given in Annexure.

          The Ministry of Tribal Affairs supplements the efforts of other Ministries like Ministry of Rural Development, Ministry of Labour and Employment, etc. in economic upliftment of the tribals in the country. The Ministry of Tribal Affairs is implementing a programme titled “Special Central Assistance to Tribal Sub-Plan (SCA to TSP) for employment-cum-income generation activities of BPL Scheduled Tribes. The ultimate objective of this programme is to boost the demand-based income-generation and thus raise the economic and social status of tribals.

          

Click here to see Annexure

Union cabinet approved interest subsidy for farmer loans

The Union Cabinet on 6 September 2012 gave its approval to continue interest subsidy to Public Sector Banks (PSBs), Regional Rural Banks (RRBs), Cooperatives Banks and NABARD enabling them to provide short-term crop loans of up to Rs 3 lakhs to farmers at 7% p.a. during the year 2012-13.

It was also decided to provide additional interest subsidy of 3% p.a. to those farmers who repay loans within one year of disbursement in the current fiscal year.

The Cabinet allowed the release of 10901 crore Rupees as interest subvention for 2012-13. Interest subsidy is allowed for small and marginal farmers having Kisan Credit Cards for loan. The Cabinet approved the release of 442 crore rupees as interest subsidy to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest.

Centre has subsidized short-term crop loans to farmers since 2006-07 to ensure the availability of crop loans to farmers of upto Rs.3 lakh at 7% p.a. Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2012-13, the target for agricultural credit flow has been raised to Rs 575000 crore from Rs 475000 crore in the year 2011-12.

Rashtriya Swasthya Bima Yojana

Rashtriya Swasthya Bima Yojana has been extended to licensed porters, licensed vendors and licensed hawkers on the Railways in consultation with Ministry of Labour & Employment. Railways are facilitating below poverty line beneficiaries for coverage under the scheme being implemented by the concerned State Governments. In the case of above poverty line beneficiaries, 75 per cent of the premium will be borne by the Railways subject to a maximum of Rs. 565/- per family per annum, whichever is less and the remaining 25 per cent to be contributed by the beneficiaries, who will also have to pay an amount of Rs. 30/- per family per year as registration/renewal fee.

National Family Benefit Scheme

The Ministry of Rural Development is implementing, through State Governments and UT Administrations, a scheme namely National Family Benefit Scheme (NFBS). Under this scheme, earlier a provision of grant of Rs. 5,000/- was made in case of natural death of BPL primary bread winner. The primary BPL bread winner specified in the scheme, whether male or female, had to be a member of the household whose earning contributed substantially to the total household income. The death of such primary bread winner occurring whilst he/she was in the age group of 18 to 64 years. In the year 1998, the amount of benefit has been raised to Rs. 10,000/- in case of death due to natural causes as well as accidental causes.

The funds are released to State Governments and UTs by Ministry of Finance as Additional Central Assistance. The National Family Benefit Scheme is a sub-scheme of the National Social Assistance Programme (NSAP) and details of funds released sub-scheme wise to State/UTs are not maintained. These sub-schemes are only for BPL families.

UNIDO Findings on Industrial Growth

According to a Report of United Nations Industrial Development Organization (UNIDO) the world manufacturing output rose by 5.5. per cent in the third quarter of 2011, compared to the same period of 2010. This growth is mainly attributed to developing countries, whose manufacturing output increased by 13 per cent.

There has been some moderation in the growth rate of industrial production as measured in the Index of Industrial Production (IIP). The IIP growth rate in the fourth quarter (Jan-March) 2011-12 was 0.6% as compared to the growth rate registered of 7.9% in the corresponding quarter of previous year (Jan-March) 2010-11.

The major sectors that have adversely affected IIP growth are manufacturing and mining. Major reasons for the decline in manufacturing include global economic uncertainty, sluggish domestic demand, hardening of interest rates etc., whereas regulatory and environmental issues, court orders, decline in international demand for metallic minerals etc. Are affecting production in the mining sector.

Recent data on Poverty in India

Below Poverty Line Population in (%)

Survey Year          Rural   Urban  Total

1993-94                       50.1       31.8       45.3

2004-05                       41.8        25.7      37.2

2009-10                       33.8        20.9      29.8

 States

Poverty ratio in Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, Sikkim, Tamil Nadu, Karnataka and Uttarakhand has declined by about 10 percentage points more.

In Assam, Meghalaya, Manipur, Mizoram and Nagaland, poverty in 2009-10 has increased.

Some of the bigger states such as Bihar, Chhattisgarh and Uttar Pradesh have shown only marginal decline in poverty ratio, particular in rural areas. States with high incidence of poverty are Bihar at (53.5 per cent), Chhattisgarh (48.7 per cent), Manipur (47.1 per cent), Jharkhand (39.1), Assam (37.9 percent) and Uttar Pradesh (37.7 per cent)

Social Groups

In rural areas, Scheduled Tribes exhibit the highest level of poverty (47.4%), followed by Scheduled Castes (SCs), (42.3%), and Other Backward Castes (OBC), (31.9%), against 33.8% for all classes.

In urban areas, SCs have Head Count Ratio of 34.1% followed by STs (30.4%) and OBC (24.3%) against 20.9% for all classes. In rural Bihar and Chhattisgarh, nearly two-third of SCs and STs are poor, whereas in state such as Manipur, Orissa and Uttar Pradesh the poverty ratio for these groups is more than half.

Religious Groups

Sikhs have lowest Head Count Ratio in rural areas (11.9%) whereas in urban areas, Christians have the lowest proportion (12.9%) of poor. In rural areas, the Head Count Ratio for Muslims in very high in states such as Assam (53.6%), Uttar Pradesh (44.4%), West Bengal (34.4%) and Gujarat (31.4%). In urban areas poverty ratio at all India level in highest for Muslims (33.9%). Similarly, for urban areas the poverty ratio is high for Muslims in states such  as Rajasthan (29.5%), Uttar Pradesh (49.5%), Gujarat (42.4%), Bihar (56.5%) and West Bengal (34.9%)

Occupational Categories

Nearly 50% of agricultural labourers and 40% of other labourers are below the poverty line in rual areas, whereas in urban areas, the poverty ratio for casual labourers is 47.1%. Those in regular wage/salaried employment have the lowest proportion of poor. In the agriculturally prosperous state of Haryana, 55.9% agricultural labourers are poor, wheareas in Punjab t is 35.6%. The HCR of casual labourers in urban areas is very high in Bihar (86%), Assam (89%), Orissa (58.8), Punjab (56.3%), Uttar Pradesh (67.6%) and West Bengal (53.7%).

Highlights

1. Only about 46% of household have toilet facilities
2. As per the Household Consumer Expenditure Survey for 2009-10, 29.9 per cent of the population is under BPL
3.  Rural poverty declined by 8 percentage points, urban poverty down by 4.8 per cetn
4.  Poverty has gone up in the north-eastern States of Assam, Meghalaya, Manipur, Mizoram and Nagaland
5.  Bihar has the highest incidence of poverty at 53.5 per cent.
6.  Among social groups in the rural areas, Scheduled Tribes (47.4 per cent) suffer the highest level of poverty.
7.  Among social groups in the urban areas, Scheduled Castes (34.1 per cent)suffer the highest level of poverty.
8.  Among religious groups in the rural areas, Sikhs have the lowest level of poverty at 11.9 per cent
9.  Among religious groups in the urban areas, Christians have the lowest level of poverty at 12.9 per cent
10.  Both in rural and urban areas, Muslims have a high level of poverty ranging from 29 per cent to 53 per cent
11. Just 32% of households use treated water for drinking
12. About 17% of the households still fetch drinking water from a source located more than 500 m in rural areas 100 m in urban areas
13. About 11% more households have got access to electricity between the years 2001 and 2011.
14. About 45% households owns a cycle which remains the primary mode of transportation. 

• Poverty - Types and Indicators

1. Poverty can be of different types like absolute poverty and relative poverty. There may be many other classifications like urban poverty, rural poverty, primary poverty, secondary poverty and many more. Whatever be the type of poverty, the basic reason has always been lack of adequate income. Here comes the role of unemployment behind poverty.

   Lack of employment opportunities and the consequential income disparity bring about mass poverty in most of the developing and underdeveloped economies of the world.

   Absolute Poverty

   Poverty is usually measured as either absolute or relative poverty (the later being actually an index of income inequality). Absolute poverty refers to a set standard which is consistent over time and between countries.

   The World Bank defines extreme poverty as living on less than US $1.25 (PPP) per day, and moderate poverty as less than $ 2 a day (but note that a person or family with access to subsistence resources, e.g. subsistence farmers, may have low cash income without a correspondingly low standard of living - they are not living on their cash income but using it as a top up). It estimates that in 2001, 1.1 billion people had consumption level below 1$ a day and 2.7$ billion lived on less than $2 a day.

   Relative Poverty

   Relative poverty views poverty as socially defined and dependent on social context, hence relative poverty is a measure of income inequality. Usually, relative poverty is measured as the percentage of population with income less than some fixed proportion of median income. There are several other income inequality metrics, for example for Gini coefficient or the Theil Index.

   Relative poverty measures are used as official poverty rates in several developed countries. As such these poverty statistics  measure inequality rather than material deprivation or hardship. The measurements are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on 'economic distance' a level of income is set at 60% of the medial household income. 

   Multidimensional Poverty Index

   The multidimensional Poverty Index (MPI) was developed in 2010 ny Oxford Poverty and Human Development Initiative and the United Nations Development Program. The MPI is an index of acute multidimensional povety. It reflects deprivations in very rudimentary services and core human functioning for people across 104 countries. Although deeply constrained by data limitations, MPI reveals a different pattern of poverty than income poverty, as it illuminates a different set of deprivations.

   The MPI has three dimensions - health, education, and standard of living. These are measured using ten indicators. Each dimension and each indicator within a dimension is equally weighted.

   
   

   These 10 indicators are used to calculate the MPI:

   Education (each indicator is weighted equally at 1/6)

   • Years of Schooling - Deprived if no household member has completed five years of schooling.
   • Child Enrollment - Deprived if any school aged child is not attending school in years 1 to 8.

   
   

   Health (each indicator is weighted equally at 1/6)

   • Child Mortality - Deprived if any child has died in the family
   • Nutrition - Deprived if any adult or child for whom there is nutritional information is malnourished.

   
   

   Standard of Living (each indicator is weighted equally at 1/18)

   • Electricity - Deprived if the household has no electricity.
   • Sanitation - Deprived if they do not have an improved toilet or if their toiled is shared (MDG Definition).
   • Drinking Water - Deprived if the household does not have access to clean drinking water or clean water is more than 30 minutes walk from home (MDG Definition).
   • Floor - Deprived if the household has dirt, sand or dung floor.
   • Cooking Fuel - Deprived if they cook with wood, charcoal or dung.
   • Assets - Deprived if the household does not own more than one of radio, TV, telephone, bike or motorbike.

   
   

   A person is considered poor if they are deprived in at least 30% of the weighted indicators. The intensity of poverty denoted the proportion of indicators in which they are deprived.

Panel for postponement of GAAR by 3 years

The expert committee on General Anti Avoidance Rules (GAAR) on September 1 recommended postponement of the controversial tax provision by three years and abolition of capital gains tax on transfer of securities.

As a step towards reassuring global investors, the Committee in its draft report, suggested that GAAR provisions should not be invoked to examine the genuineness of the residency of entities in Mauritius.

Mauritius is the most preferred route for foreign investments because of the liberal taxation regime in the island country. India has a double taxation avoidance treaty with Mauritius.

The Committee, headed by Parthasarathi Shome, has recommended that GARR be applicable only if the monetary threshold of tax benefit is Rs 3 crore and more.

The draft report, which was submitted to the Finance Ministry, has also sought comments from the stake holders by September 15. The Shome Committee was set up by Prime Minister Manmohan Singh to address the concerns of foreign investors.

Meanwhile, the Finance Ministry has also expanded the scope of the terms of reference of the committee to include all non-resident tax payers instead of only FIIs.

The draft report of the Shome committee said: ”...GAAR should be deferred for 3 years. But the year, 2016-17, should be announced now. In effect, therefore, GAAR would apply from assessment year 2017-18. Pre-announcement is a common practice internationally, in today’s global environment of freely flowing capital”.

In view of wide-spread concerns by foreign investors, the government had earlier postponed implementation of GAAR, which was introduced by the then Finance Minister Pranab Mukherjee in his Budget for 2012-13 to check tax evasion.

Four Water Purification Plants set up in Coastal Areas

The Centre has installed four plants for converting sea water into drinking water based on indigenously designed and developed Low Temperature Thermal Desalination (LTTD) technology. National Institute of Ocean Technology, an autonomous body of the Ministry of Earth Sciences has set up the plants at Kavarati, Minicoy, Agatti in Lakshadweep and the fourth one is at North Chennai Thermal Power Station, Chennai. The Minister of Rural Development and the Minister of Drinking Water and Sanitation Shri Jairam Ramesh said in a written reply in the Rajya Sabha that the cost per litre of produced drinking water would depend on the technology used and cost of electricity which varies from place to place. However, according to the cost estimates made recently by an independent agency for LTTD technology, the operational costs per litre of desalinated drinking water currently works out to be 19 paise for island based plants which is exclusive of capital cost. He said, approval has also been accorded to set up six more LTTD plants, one each in Amini, Chetlet, Kadamat, Kalpeni, Kiltan and Andrott islands of Lakshadweep. The Minister added that there is also a proposal to set up another palnt with a capacity of generating 2 million litres of potable water per day at Tuticorin Thermal Power Station, Tamil Nadu.

Production of Vegetables and Fruits on the Rise

The production of vegetables and fruits in the country is estimated to be 1505.86 and 752.74 lakh tonnes respectively, during 2011-12 as compared to 1465.54 and 748.78 lakh tonnes during 2010-11.

The Government of India has been implementing Horticulture Mission for North East and Himalayan States (HMNEH) and National Horticulture Mission (NHM) in the remaining States of the country for enhancing production and productivity of horticulture crops including fruits and vegetables. Under these missions, assistance is provided for establishment of nurseries, seed production for vegetables, enhancing quality production and productivity of fruits and vegetables through area expansion, protected cultivation, canopy management, integrated nutrient and water management, integrated pest management, rejuvenation of senile orchards, mechanization, Human Resource Development, etc.

Agriculture Ministry is implementing Market Intervention Scheme (MIS) on request of State/ UT Governments for procurement of various horticultural commodities. The purpose of implementation of MIS is to protect the growers from making distress sales in the event of a bumper crop when there is glut in the market, causing prices to fall below economic levels/ cost of production. Losses, if any, incurred by the procuring agencies are shared equally between the Central Government and the State Government concerned on 50:50 basis (75:25 in case of North-Eastern States). MIS was sanctioned for procurement of 54,000 MT of onion at the Market Intervention Price of Rs.6,000 per MT w.e.f. 14.12.2011 to 14.01.2012 in Karnataka during 2011-12.

488 Lakh Soil Health Cards Issued

About 488.25 lakh soil health cards have been distributed to farmers up to March 2012. The Government is according high priority to soil testing and is providing assistance to State Government/ Union Territories (UTs) for setting up Soil Testing Laboratories (STLs) for augmenting existing capacity of States for soil testing for issuing soil health cards to farmers. However, this requires effort by State Governments/ UTs in mobilizing technical manpower for soil testing and issuing soil health cards.

21, 751 Village Grain Banks Sanctioned for 20 States

The Government has been sanctioned 21,751Village Grain Banks to 20 States. The Village Grain Banks Scheme provides safeguards against starvation during period of lean season or natural calamity, when marginalized food insecure households do not have sufficient resources to purchase rations. Such households in need of food grains, can borrow food grains from the Village Grain Banks set up within their villages to be subsequently returned to the Bank. The grain banks can be set up in food scarce areas like drought prone areas, hot and cold desert areas, tribal areas and the inaccessible hilly areas which remain cut off because of natural calamities like flood etc. About 30-40 Below Poverty Line/Antyodaya Anna Yojana families may form a grain bank. These villages are to be identified/notified by the concerned State Government/Union Territory Administration. Foodgrains are loaned to BPL families @ one quintal per family under Village Grain Bank Scheme, he added.

Strengthening of PDS

With a view to specifically target poor sections of society, Targeted Public Distribution System (TPDS) was launched in 1997. Under TPDS, foodgrains (rice and wheat) @ 35 kg per family per month are allocated to States/Union Territories (UTs) for 6.52 crore accepted number of Below Poverty Line (BPL)/Antyodaya Anna Yojana (AAY) families for distribution at subsidized prices through Fair Price Shops. Allocation of foodgrains are also made to Above Poverty Line (APL) families depending upon the availability of foodgrains in Central pool and past offtake. Presently, the allocations of foodgrains to APL families range between 15 kg to 35 kg per family per month. This information was given by Prof. K.V. Thomas, Minister for Consumer Affairs Food and Public Distribution System in a written reply in Lok Sabha today.

The Minister stated that strengthening and streamlining of TPDS is a continuous process. To improve functioning of TPDS, Government has been regularly requesting State/UT Governments for continuous review of lists of BPL and AAY families, ensuring timely availability of foodgrains at Fair Price Shops (FPSs), ensuring greater transparency in functioning of TPDS, improved monitoring and vigilance at various levels and introduction of new technologies such as Computerization of TPDS operations at various levels. States/UTs have also been advised to improve the viability of FPSs by enlarging the basket of commodities by adding non-PDS items for sale through FPSs, rationalization of commission to FPS dealers, door-step delivery of foodgrains, etc. the Minister added.

National food Security Mission helps Exceed Foodgrain Production Target

National Food Security Mission (NFSM) has been implemented in the identified districts of major foodgrain producing States of the country during 11th Five Year Plan. From the year 2012-13, six NE States viz. Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Sikkim and two States viz. Himachal Pradesh and Uttarakhand have been included under NFSM-Rice and three States viz. Himachal Pradesh, Jammu & Kashmir and Uttarakhand under NFSM-Wheat. Thus, in all NFSM is now implemented in 27 States of the Country during 2012-13. Under NFSM, incentives are provided to the farmers for purchase of seed, nutrients, soil amenders, plant protection chemicals, farm machinery including pumpsets and sprinklers etc. Farmers are also availing benefit from the training and technology demonstrations conducted on the fields.

The aim of the Mission was to enhance foodgrain production by 20 million tonnes (10 million tonnes of Rice, 8 million tonnes of Wheat and 2 million tones of Pulses). As a result of implementation of NFSM the production of Wheat has increased from 75.81 million tons (in pre-NFSM year of 2006-07) to 93.90 million tons during 2011-12 (4th Advance Estimate) i.e. nearly, 18.09 million tons is achieved against the envisaged target of 8 million tons at the end of 11th plan period. Similarly, the total production of rice has increased from 93.35 million tons (in pre –NFSM year 2006-07) to 104.32 Million tons in 2011-12 (4th Advance Estimate) with an increase of nearly 10.97 million tons against the target of 10 million tons. The total production of pulses has also increased from 14.20 million tons during 2006-07 to 18.24 million tons during 2010-11 with an increase of 4.04 million tons against the envisaged target of 2.0 million tons. The production of pulses during 2011-12 is estimated as 17.21 million tons (as per 4th advance estimate). Moisture stress in states of Maharashtra, Karnataka and parts of Andhra Pradesh impacted pulses production in Kharif, 2011.

Regulator SEBI permitted seven Alternative Investment Funds (AIFs) to start Operation in India

Market regulator Securities and Exchange Board of India (SEBI) in August 2012 permitted seven Alternative Investment Funds (AIFs) to start operation in India under a newly formulated route that enable pooling of funds for investments in areas such as real estate, private equity and hedge funds. Six AIFs registered with the regulator in August 2012, while one was granted registration back on 23 July 2012. SEBI had published its guidelines with regard to AIF in May 2012.
The seven AIFs that registered with SEBI include IFCI Syncamore India Infrastructure Fund, Utthishta Yekum Fund, Indiaquotient Investment Trust, Forefront Alternate Investment Trust, Excedo Realty Fund, Sabre Partners Trust and KKR India Alternate Credit Opportunities Fund.
Funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing would have to follow a pre-decided policy. SEBI decided to allow promoters of listed companies can offload 10 per cent of equity to AIFs such as such as SME Funds, Infrastructure Funds, PE funds and Venture Capital Funds registered with the market regulator to attain minimum 25 per cent public holding.
AIFs, as per SEBI guidelines can operate broadly in three categories and it is mandatory for them to get registered with the regulator. The SEBI rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.
AIF Categories
The Category I AIFs are those where funds stand a chance of getting certain incentives or concessions from the government, SEBI or other regulators in India and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.
The Category II AIFs are those funds which can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include PE funds, debt funds or fund of funds, as also all others falling outside the ambit of Category I and Category III.
The Category III AIFs are those trading with an objective to make short term returns and include hedge funds, among others.

Poverty - Types and Indicators

Poverty can be of different types like absolute poverty and relative poverty. There may be many other classifications like urban poverty, rural poverty, primary poverty, secondary poverty and many more. Whatever be the type of poverty, the basic reason has always been lack of adequate income. Here comes the role of unemployment behind poverty.

Lack of employment opportunities and the consequential income disparity bring about mass poverty in most of the developing and underdeveloped economies of the world.

Absolute Poverty

Poverty is usually measured as either absolute or relative poverty (the later being actually an index of income inequality). Absolute poverty refers to a set standard which is consistent over time and between countries.

The World Bank defines extreme poverty as living on less than US $1.25 (PPP) per day, and moderate poverty as less than $ 2 a day (but note that a person or family with access to subsistence resources, e.g. subsistence farmers, may have low cash income without a correspondingly low standard of living - they are not living on their cash income but using it as a top up). It estimates that in 2001, 1.1 billion people had consumption level below 1$ a day and 2.7$ billion lived on less than $2 a day.

Relative Poverty

Relative poverty views poverty as socially defined and dependent on social context, hence relative poverty is a measure of income inequality. Usually, relative poverty is measured as the percentage of population with income less than some fixed proportion of median income. There are several other income inequality metrics, for example for Gini coefficient or the Theil Index.

Relative poverty measures are used as official poverty rates in several developed countries. As such these poverty statistics  measure inequality rather than material deprivation or hardship. The measurements are usually based on a person's yearly income and frequently take no account of total wealth. The main poverty line used in the OECD and the European Union is based on 'economic distance' a level of income is set at 60% of the medial household income. 

Multidimensional Poverty Index

The multidimensional Poverty Index (MPI) was developed in 2010 ny Oxford Poverty and Human Development Initiative and the United Nations Development Program. The MPI is an index of acute multidimensional povety. It reflects deprivations in very rudimentary services and core human functioning for people across 104 countries. Although deeply constrained by data limitations, MPI reveals a different pattern of poverty than income poverty, as it illuminates a different set of deprivations.

The MPI has three dimensions - health, education, and standard of living. These are measured using ten indicators. Each dimension and each indicator within a dimension is equally weighted.

These 10 indicators are used to calculate the MPI:

Education (each indicator is weighted equally at 1/6)

• Years of Schooling - Deprived if no household member has completed five years of schooling.
• Child Enrollment - Deprived if any school aged child is not attending school in years 1 to 8.

Health (each indicator is weighted equally at 1/6)

• Child Mortality - Deprived if any child has died in the family
• Nutrition - Deprived if any adult or child for whom there is nutritional information is malnourished.

Standard of Living (each indicator is weighted equally at 1/18)

• Electricity - Deprived if the household has no electricity.
• Sanitation - Deprived if they do not have an improved toilet or if their toiled is shared (MDG Definition).
• Drinking Water - Deprived if the household does not have access to clean drinking water or clean water is more than 30 minutes walk from home (MDG Definition).
• Floor - Deprived if the household has dirt, sand or dung floor.
• Cooking Fuel - Deprived if they cook with wood, charcoal or dung.
• Assets - Deprived if the household does not own more than one of radio, TV, telephone, bike or motorbike.

A person is considered poor if they are deprived in at least 30% of the weighted indicators. The intensity of poverty denoted the proportion of indicators in which they are deprived.

Inter-ministerial group recommended Linking Patented Drug Prices to Per-capita Income

An inter-ministerial group formed in 2007 and entrusted with the responsibility of regulating prices of patented medicines recommended using a per capita income-linked reference pricing mechanism. The proposal by the group is expected to reduce prices of several patented dugs by up to one-third. However it will hit the profitability of foreign companies.
The committee suggested fixing the price of patented drugs by comparing the price at which these drugs are procured by governments in the UK, Canada, France, Australia and New Zealand. The committee recommended that the retail price is to be fixed by adjusting it to the per capita income of the country. The new mechanism is to be applicable for patented drugs that don’t have any therapeutic equivalents in the market.
For patented drugs that have similar alternatives in the market, the price is to be fixed in such a manner that it should not lead to an overall increase in the treatment cost. If the global launch of the patented drug takes place in India, the retail price will have to be based on the cost of developing the drugs and other factors. Prices of patented drugs are currently unregulated. Patented drugs account for 1% of the $13-billion domestic market. This share is expected to grow to 5% of the estimated $50-60 billion drug market by 2020.
The Indian Pharmaceutical Alliance, the representative body of big Indian drugmakers, supported the reference-based system. The Organisation of Pharmaceutical Producers of India (OPPI), the lobby body of multinationals however stated that the cross-country per capita income-linked proposal is fundamentally flawed.
The Indian government is of the opinion that if patented drugs are not regulated, these would remain unaffordable for most Indians. A WHO study stated that as many as 79% of Indian patients pay for their healthcare expenditure from their own pockets. However it must also be noted that if the government fixes the prices of these drugs at excessively low levels, companies may stop selling drugs in the market.
Historical Backdrop
India had adopted a new product patent regime in 2005 after it became a signatory to TRIPS, an international intellectual property protection agreement, providing 20 years of marketing exclusivity to the patent holder. Global innovator companies such as GSK, Bayer AG, Novartis, Merck & Co and Bristol Myers Squibb who started launching their drugs in India continue to remain jittery about the government’s policies aimed at reducing healthcare costs. They complain that India’s implementation of intellectual property rights has been unsatisfactory.

Contribution of MSMEs to GDP

Based on the data of Gross Domestic Product (GDP) published by Central Statistical Office, Ministry of Statistics and Programme Implementation, the contribution of Micro and Small Enterprises (MSEs) to GDP and total industrial production was estimated to be 8.72% and 44.86% respectively during the year 2008-09. The estimated contribution of Micro, Small and Medium Enterprises (MSMEs) in total exports of the country for the year 2007-08 (latest available), based on data obtained from Export Promotion Councils, was 30.80%.

Enterprise-wise data collected on Micro, Small and Medium Enterprises (MSMEs) during the Fourth All India Census of MSMEs: 2006-07 and Economic Census 2005, Central Statistics Office, Ministry of Statistics & Programme Implementation for activities excluded from Fourth All India Census of MSMEs 2006-2007 namely wholesale/retail trade, legal, educational & social services, hotel & restaurants, transports and storage & warehousing (except cold storage) indicate that out of 361.76 lakh MSMEs, entrepreneurs belonging to Other Backward Classes owned 151.73 lakh MSMEs (41.94%) while Scheduled Castes and Scheduled Tribes entrepreneurs owned 28.34 lakh (7.83%) and 20.84 lakh (5.76%) MSMEs respectively. The socially backward classes of the society together owned 200.91 lakh MSMEs (51.54%). The women entrepreneurs also owned 38.50 lakh MSMEs (10.64%). The above data suggests that the MSMEs helped in achieving inclusive growth.

Economic Outlook 2012-13 Highlights

Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister released the document ‘Economic Outlook 2012-13’ at  in New Delhi 0n August 17.

 Following are the highlights of the document:

Ø  Economy to grow at 6.7 per cent in 2012/13

o    Farm sector GDP projected to grow at 0.5 per cent in 2012/13 due to the impact of weak monsoon on agriculture and the current reservoir storage position in 2012/13.

o    Manufacturing sector projected to grow at 4.5 per cent. Electricity, automotive, steel and cement sector have shown improvement in the period of April-June. Because of the benefits of the low base, manufacturing sector will show improved performance in the second half of this year.

o    Mining sector for the year as a whole expected to grow at 4.4 per cent due to growth in the coal and lignite sector, and some recovery in iron ore.

o    Electricity generation expected to continue to grow at an average pace of around 8 per cent.

o    Construction expected to show some improvement compared to last year as evidenced by the recent increase in the output of steel and cement.

o    In Services sector, some improvement expected particularly in the large transport, trade and communications sector.

Ø Global Situation: There is a dark mood in the advanced economies; especially in Europe. The slower growth in the US and in the EU will have an adverse impact on the expansion of these markets for India’s exports, both of goods and services.

Ø Structural Factors:

o    Gross Domestic Fixed Capital Formation as a proportion of GDP has fallen from its highest level of 32.9% in 2007/08 to 30.4 % in 2010/11 and to 29.5 per cent in 2011/12. Projected to be 30.0% in 2012/13.

o   Domestic saving rate has declined from 32.0% in 2010/11 to 30.4% in 2011/12 and projected to be at 31.7% in 2012/13.

Ø  External Sector:

o   Current Account Deficit was $78.2 billion (4.2% of GDP) in 2011/12 and projected at 67.1 billion (3.6% of GDP) in 2012/13.

§  The merchandise trade deficitwas$189.8 billion (10.2 per cent of GDP) in 2011/12 and projected at $181.1 billion (9.7 per centof GDP) in 2012/13.

§  Overall the net balance on invisibles was $111.6 billion(6.0% of GDP) in 2011/12 is expected to grow at $114 billion (6.1% of GDP) in 2012/13.

o   Capital flows were $67.8 billion (3.7% of GDP) in 2011/12 and projected at $73.2 billion (3.9% of GDP) in 2012/13. This would be adequate to service the projected CAD of $67 billion for the year as a whole.

o   Accretion to reserves projected at $4 billion in 2012/13

Ø Inflation:

o  Deficient SW monsoon likely to have an adverse impact on the prices of primary food items, especially on those where the ability of government stocks to play a moderating role is not there.Inflation rate expected to be within the range of 6.5 to 7.0 per cent at the end of 2012-13.

Ø  Expanding fiscal imbalance continues to be a major area of policy concern.

o  The fiscal deficit for the Centre was 5.89% of GDP in RE 2011/12 and is estimated at 5.06% in BE 2012/13.

o  In some contrast to the Centre’s finances, the fiscal health of the States is better. 

o  The consolidated fiscal deficit of the Centre and the State governments for 2011/12 (RE) was 8.2 per cent of GDP. The consolidate deficit based on Budget Estimates for 2012/13 is estimated to be 7.2 per cent.

o  The containment of the fiscal imbalance at the Centre rests on our managementofthe subsidy bill, especially that on refined petroleum products and by increasing the Tax-GDP ratio.

o  Introduction of the General Sales Tax on Goods & Services (GST) would be a very important milestone in the path of tax reform. It requires considerable negotiations, bargaining and preparatory work in relation to both the structure and operation of the tax.

Ø    Reforms in Agriculture sector:

Reforms in Agriculture sectorneed focused attention on liberalizing tenancy arrangements, reforming domestic markets for agricultural produce and, reducing input subsidies.

Ø    Measures to accelerate the Economic growth:

o  Integrated decision-making on high-impact infrastructure projects

For Projects costing in excess of a minimum threshold, say Rs 5,000 crore, a Cabinet Committee comprising of ministers in charge of concerned departments should take an integrated view. The Cabinet Committee on Infrastructure could be recast as the Cabinet Committee for Sustainable Development of Infrastructure for this purpose, and its composition as well as powers under the rules of business modified accordingly.

o  Permitting FDI in multi-brand retail

For channelling transfer of capital and technology, FDI in multi-brand retail up to 49 per cent may be allowed to attract investment in this sector. Such of the states as are receptive to the idea may implement this.

o  FDI and other reforms in the Aviation sector

    FDI in civil aviation may now be allowed to the existing extent of 49 per cent for foreign airlines as well.

o  Containing petroleum products subsidies

Given the huge subsidy projection for the current financial year, priority consideration may be given to (i) a suitable increase in the price of diesel in one or more steps, and (ii) a cap on the level of consumption of subsidised domestic LPG close to what is currently being consumed by poorer households, i.e., 4 cylinders.

We need to focus further on the following issues:

o    Policy predictability: There is need to specifically focus and address the apprehensions that have been occasioned by perceptions of arbitrary actions on tax and other fronts.

o    Clearing payments: Outstanding payments for infrastructure projects need to be cleared on time.

o    Promoting savings:Given the declining trend in domestic saving rate, we need to make financial products more attractive.

o    Containing inflation:

§   Taming inflation is critical for sustained growth. Need to take steps to contain high inflation in primary food which is mostly linked to the antiquated system of marketing and absence of modern handling and storage facilities for perishable products.

o    Improving the CAD:

§   Some amelioration through price reform in case of diesel could serve to contain demand.

§   To contain the import of gold, an improvement in the return as well as the regulatory regime in which mutual funds and life insurance products are sold areof utmost importance.

§   Significant improvement required in the approach of government to a number of issues to make IT-related export business much more competitive.

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