Capital markets regulator Securities and Exchange Board of India
(SEBI) on 21 June 2012 notified new rules for ownership and governance
of stock exchanges to encourage the setting up of new bourses and enable
exchanges to get listed. The amendments were announced following the
legal tussle between the regulator and MCX Stock Exchange, which had
earlier sought approval to start an equity platform.
The new norms require the recognised stock exchange to have a minimum
net worth of Rs 100 crore at all times and at least 51 per cent of
stake has to be held by public.
The ownership of a single investor
was capped at 5% with an exemption for stock exchanges, depositories,
insurance and banking companies and public financial institutions, which
has been permitted to hold up to 15 per cent. The shareholders who
hold stake in excess of the new limits would have to comply with new
norms within a period to be decided by SEBI and such period could be of
up to three years.
SEBI also specified that direct and indirect exposure to any stock
exchange will be considered while calculating the prescribed
shareholding limit. The new rules permits stock exchanges to list on any
recognised stock exchange other than itself and its associated stock
exchanges, within three years of commencing operations.
It was
highlighted that for a stock exchange that is not listed, an FII may
acquire shares through transactions outside of a recognised stock
exchange provided it is not an initial allotment of shares. For listed
bourses, the FIIs can transact through the exchange where the shares are
listed. The market regulator had earlier in April 2012 approved changes
to the Manner of Increasing and Maintaining Public Shareholding (MIMPS)
in recognised stock exchanges at a board meeting.
SEBI is currently in the process of formulating minimum listing
standards for listing of companies on stock exchanges. A Conflicts
Resolution Committee or CRC will be formed by SEBI with a majority of
external and independent members to deal with all issues concerning
conflicts of interest with respect to listing of companies. The CRC will
first consider matters of policy and guidelines involving conflict
issues and then recommend standards relevant to the areas of potential
conflict in exchanges.
With respect to listing the market regulator mentioned that a
recognised stock exchange may apply for listing of its securities on any
bourse other than itself and its associated stock exchange, provided
they comply with the new regulations of ownership and governance and
also has completed three years of continuous trading operations and has
got SEBI’s approval. The shares of a recognised stock exchange and a
recognised clearing corporation is required to be in demat form, while
clearing corporation cannot hold any right, stake or interest in an
exchange.
Saturday, June 23, 2012
The myth of remunerative farm prices
“Bonanza for Farmers” and “Price Shoots Up” were some of the shrill
headlines in the leading financial dailies that reported the
announcement of minimum support prices (MSP) for kharif crops, 2012-13,
made by the Cabinet Committee On Economic Affairs (CCEA) on June 15.
Almost every newspaper vied with the other to portray it as the biggest
ever hike and fuel fears that it will stoke food inflation, as though
they were all paid to report this news in a particular manner. They
claim that the MSP announced will worsen food subsidy burden and the
Government’s procurement costs will soar.
Most newspapers wilfully concealed the fact that input prices underwent
massive hikes over the last few years, the last year being no exception
to the trend.
It would not require extraordinary insight to comprehend that the prices
announced were neither “fair” nor “remunerative”. All that reporters
were required to do is to look at the massive price hikes in all
non-urea fertilisers for the current kharif planting season on the same
day they reported the kharif MSP increase.
Further still, if they had bothered to research a bit into the increase
in prices of inputs over the last one year even without really meeting a
single farmer, they would realise how cultivation costs had reached
sky-high. They could at least have bothered to look into the deflated
costs of production that the Government’s own advisory body, the
Commission on Agricultural Costs and Prices (CACP) came up with in
2011-12 in its Kharif Price Policy document.
UNDERESTIMATION BY CACP
According to the CACP’s own admission, it has arrived at the likely
levels of cost of production in different States for 2011-12, on the
basis of the cost of production data available for the year 2008-09.
This data itself had been much contested by the peasants and peasant
organisations at that time. The CACP conveniently seems to have
forgotten to upwardly revise these figures, while computing the MSP for
2012-13 kharif.
According to the document, the weighted average Cost of Production (C2)
for paddy in 2011-12 was Rs 887.82 a quintal. This figure is deceptive
as it is an average of the costs of production in various States. It
ranges from a low of Rs 688.39 a quintal in Uttarakhand to a high of Rs
1,482.13 a quintal for Maharashtra. The cost projection by States was
much higher and ranged from a low of Rs 950 a quintal in West Bengal to
Rs 1,780 a quintal in Maharashtra.
Even if one were to uncritically take Rs 887.82 a quintal as the C2, and
apply the M.S. Swaminathan Commission Recommendation of C2+50 per cent
to compute the MSP, then it must have stood at Rs 1,331.73 a quintal in
2011-12. Now, after one full year the Government has announced an MSP of
Rs 1,250 a quintal and Rs 1,280 a quintal for paddy for 2012-13 kharif.
According to the CACP’s own admission, MSP fixed on the basis of
weighted average cost of production did not meet even the cost of
production in many States in 2011-12.
Despite assurances that the overall cost of production will include the
crop insurance premium paid by the farmers, marketing and transport cost
incurred by them and apparent approval for the same by the Government,
it has just remained on paper. The CACP, however, in 2011-12 had
conducted an exercise to calculate the cost of production, inclusive of
marketing, transportation and insurance premium. These figures are even
higher than the 2012-13 MSP for almost all crops (see table).
Based on the 2011-12 cost of production data, the C2+50 per cent is far
higher than the kharif 2012-13 MSP for all crops except urad, for which
it is marginally higher. While the CACP has made some effort in 2011-12
to portray its exercise as being inclusive of marketing, insurance
premium and transportation costs and factored in these costs in the
modified cost of production, it seems to have remained oblivious to the
skyrocketing prices of all agricultural inputs while computing the MSP
for kharif 2012-13.
FERTILISER COSTS
The truth that neither the CACP nor the experts have spoken about,
however, is that ever since 2008-09, the prices of inputs have increased
drastically. The increase in fertiliser prices over the last two years,
ever since the nutrient-based subsidy (NBS) came into being, has been
phenomenal.
On the same day that the Government announced the MSP of kharif crops,
fertiliser companies drastically raised farmgate prices of all non-urea
fertilisers, citing depreciation of the rupee and reduction in subsidies
on various nutrients by the Government under the NBS scheme.
The MRP of di-ammonium phosphate (DAP), the most widely used fertiliser
after urea, has gone up from Rs 9,350 a tonne in 2010 April to Rs
24,000. The price of muriate of potash has risen from Rs 4,455 a tonne
to Rs 17,000 a tonne during the same period. These are net figures and
do not include State taxes.
The experience across the country has been that the farmers are forced
to pay more due to black marketing and artificial scarcity created by
unscrupulous traders. Farmers have been paying as high as Rs 26,000 a
tonne for DAP even in April. (Given below is a table comparing non-urea
fertiliser prices at present with prices during the last rabi.)
The Department of Fertilisers has also further proposed a hike of
another 10 per cent in urea prices. Moves are afoot to cut the subsidies
to chemical fertilisers even further on the pretext of subsidising
bio-fertilisers. Unfortunately, the CCEA and the CACP have not factored
in the exorbitant input costs while computing the MSP.
One can fudge the truth by resorting to clever jugglery of figures. The
apologists of neo-liberal policies and their voices in the media are
just doing that.
Importance of green accounting
GDP growth has become virtually every nation’s default measure of
progress. For India, its slowing GDP continues to make headlines and is
the subject of much debate.
Amid concerns from the Government, the business community and citizens
on what impact external events such as the evolving European sovereign
debt crisis may have on India’s growth and jobs, it might also be the
perfect time to take a moment and reflect on India’s economic journey
over the last decade, and ask whether the remarkable GDP growth has been
a true measure of the nation's wealth and more significantly, its
economic sustainability.
Like all emerging and growing economies, India is facing a catch-22
situation: On the one hand, there is pressure to maintain GDP growth as
this is the perceived foundation upon which the future economic security
of its growing population is based, but conversely, India must also
take into consideration the costs of development and not
self-cannibalise its rich natural capital wealth and jeopardise the very
future of the people it is trying to secure.
Over-reliance on GDP as a measure of economic health can be misleading.
As noted long ago by Robert F. Kennedy: “it measures everything, in
short, except that which makes life worthwhile.”
ENVIRONMENTAL LOSS
GDP measures the value of output produced within a country over a
certain time period. However, any depreciation measurements used, will
account only for manmade capital and not the negative impact of growth
on valuable natural capital, such as water, land, forests, biodiversity
and the resulting negative effects on human health and welfare.
For India, there is much to lose if action is not taken to preserve its
natural environment. Its wide range of climate, geography and culture
make it unique amongst biodiversity rich nations.
Biodiversity is an incredibly valuable asset. It is the underlying
foundation of the earth’s ecosystems, the variety and abundance of
species that inhabit them and the variability and diversity of genetic
material found within them.
It provides numerous benefits, from food and fuel, to services such as
freshwater, soil fertility, flood control, pollination of crops and
carbon sequestration by forests that are crucial to both environmental
and human well-being. To this end, biodiversity loss does not only mean
the loss of species, but also the loss of ecosystem functioning.
Although India’s economic growth is to be encouraged, the double-digit
GDP fixation is threatening India’s biodiversity and ironically, its
long-term growth and security.
For example, despite India having set in place a remarkable Protected
Areas network (4.8 per cent of the total geographical area of the
country), it continues to be challenged by the loss of natural habitats.
Over the course of the last fifty years, India has lost over half its
forests, 40 per cent of its mangroves and a significant part of its
wetlands. At least 40 species of plants and animals have become extinct
with several hundred more endangered.
Livelihoods have been lost, poverty increased, food security threatened
and health risks raised. Today, annual economic costs of air pollution,
contaminated water, soil degradation, and deforestation are estimated to
be close to 10 per cent of India’s GDP.
GREEN ACCOUNTING
Better macroeconomic and societal indicators are needed to reflect the
contribution of biodiversity and ecosystem services to human well-being.
One approach that is gaining momentum across the globe is “green
accounting” whereby national accounts are adjusted to include the value
of nature´s goods and services.
Mr Jairam Ramesh, the former environment minister, advocated greening
India’s national accounts by 2015 and encouraged policy makers to
recognise the trade-off between pursuing high growth economic policies
against the extensive impact they could have on India’s natural capital.
One organisation that is already leading the way is the Green Indian
States Trust (GIST) which, in 2003 unleashed a series of environmentally
adjusted accounts under the Green Accounting for Indian States Project.
According to their results, the loss of forest ecological services
(i.e. soil erosion prevention, flood control and ground water
augmentation) over three years (2001-03) due to declining dense forests
was estimated at an astounding 1.1 per cent of GDP.
Breaking it down by States, they showed that for native forest-rich
states such as Arunachal Pradesh, Assam, Himachal Pradesh, Jammu and
Kashmir and Mizoram, the loss of these services was significantly high
as a proportion of their net state domestic product (NSDP) — an
estimated 6 per cent. For instance, if we look at Assam where forest
cover decreased by 0.28 million hectares over three years, the value of
effective flood control alone was at a loss of Rs 800 million.
Following up on the initial study, GIST performed another round of
accounting for the period 2003-2007 and the results speak loudly.
Although the FSI claims an increase in overall forest cover in India,
native dense forest cover is still declining rapidly.
According to GIST´s latest results, the North-Eastern states continue to
be most affected, particularly Arunachal Pradesh and Mizoram where the
loss of forest ecological services is more than 12 per cent of their
NSDP.
So how is India responding?
India is beginning to recognise that protecting biodiversity and
ecosystems is a critical national priority. As a sign of its commitment,
India will host the most important meeting relating to the United
Nations Convention on Biological Diversity (CBD) — the 11th Conference
of Parties (COP-11) — in Hyderabad, during October 8-19, 2012.
The CBD framework emerged from the Rio Earth Summit of 1992 as the most
comprehensive international agreement that aims to help protect and
sustain biodiversity and ecosystems worldwide of which India is a
signatory.
As proud hosts to this important event, India has the opportunity to
show the world that it can take the lead and deliver on its commitments
to preserving and protecting biodiversity and the ecosystem services it
supports. At least this is one step in the right direction.
Thursday, June 14, 2012
Poverty Alleviation Programmes
The fruits of economic growth have not benefited everyone uniformly.
Some are left behind and some others are not touched by the benefits of
economic growth. It is proved globally that the so-called trickle-down
effect does not work in all the societies and India is no exception to
this. There are various reasons for this uneven development in the
society. Modern economy is technology driven and not labour-intensive.
High volume of high quality goods and services are produced with fewer labour hands. In short, the modern economy is not generating much employment and sometimes it displaces and replaces labour with machines and tools. The period of 1999-2000 to 2004- 2005 saw rapid economic growth in the country but it has not impacted on the unemployment problem of the country. During this period, the unemployment rate remained almost same for rural males and decreased by just one percentage for urban male. On the other hand, unemployment among females increased by one percentage for urban and rural females.
One-third of the country’s population is still illiterate and a majority are not educated up to the age of 15 years. Even among the educated, all do not have employable skills of the modern economy. The education system is not tuned to the changing economic scenario. The large agriculture workforce in rural areas is not sustainable with dwindling cultivable land and use of modern methods of cultivation. As a result, the rural labour is pushed into cities in search of work but they do not have any employable skills in the urban formal sector often end up doing odd jobs in urban areas.
Urbanization in this country is mainly due to acute poverty in rural areas, rather than due to the economic opportunities in urban areas. Further, poverty is not uniformly spread in the country. States like Orissa, Bihar and Madhya Pradesh have high level of poverty and the levels have not come down significantly in the post-economic reform era.
It is also pertinent to understand that some of the people are unable to be part of the economic reform and do not have the capacity to participate in the economic development process. Such groups need government intervention to ensure that they are not left behind in the development process and deprived of the benefits because they do not have the capacity to be part of the global economy. The government needs to develop safety nets for such groups and try to mainstream them in the development process. They need welfare measures in the form of poverty alleviation programmes to ensure that they survive, if not prosper, in this era of economic reform. Further, the poor are not a homogeneous population and their capacity to survive the economic reform varied from one group of poor to another. Especially, those who are below the poverty line or the poorest among the poor need more government help.
The government of India's poverty alleviation programmes can be broadly classified under five categories: (a) Self-employment programmes like the Swarnajayanti Gram Swarojgar Yojana; (b) Wage-employment programmes like the Sampoorna Grameen Rojgar Yojana and the National Rural Employment Guarantee (NREG) scheme; (c) Area development programmes like Drought Prone Area Programmes and the Rashtriya Sam Vikas Yojana; (d) Social security programmes like the National Old Age Pension Scheme; (e) Other programmes like the Indira Awaas Yojana.
Self-employment programmes
Self-employment programmes were introduced at the national level in the late 1970s. Initially, the programmes were designed to provide skills, subsidized credit and infrastructure support to small farmers and agricultural labourers so that they could find new sources of income.
In the 1980s, the focus of the self-employment programmes was extended to cover target groups such as scheduled castes and tribes, women and rural artisans. The coverage also extended to specific areas such as animal husbandry, forestry and fishery.
The largest of these programmes was the Integrated Rural Development Programme (IRDP). According to a mid-term appraisal of the Ninth Plan done by the Planning Commission, the IRDP suffered from several defects including: sub-critical investment, unviable projects, illiterate and unskilled beneficiaries with no experience in managing an enterprise, indifferent delivery of credit by banks, overcrowding of lending in certain projects such as dairy, under-emphasis on activities like trading, service and even simple processing, poor targeting and selection of non-poor, rising indebtedness, and scale of IRDP outstripping capacity of government and banks.
Other self-employment programmes suffered from similar deficiencies.
In 1999, several self-employment programmes were integrated into the Swarnajayanti Gram Swarojgar Yojana (SGSY). The key feature of the SGSY is that it does not seek to promote individual economic activities. It seeks to promote self-help groups that are trained in specific skills so they can formulate microenterprise proposals. Such projects are based on activities that are identified for each block on the basis of local resources, skills and markets. The projects are supported by bank credit and government subsidies.
While the SGSY is implemented by district rural development agencies through panchayat samitis, NGOs are expected to play a major role in the success of the programme.
Wage-employment programmes
The first major wage-employment programme was introduced in the 1960s to provide employment to the rural unemployed particularly during the lean agricultural season.
Subsequently, several wage-employment programmes were launched by the Central and State governments. The largest of these was the Jawahar Rozgar Yojana (JRY), which was redesigned in 1999 as the Jawahar Gram Samridhhi Yojana (JGSY).
Other notable schemes were: the Employment Assurance Scheme (EAS), and the Employment Guarantee Scheme of the Maharashtra government.
According to a mid-term appraisal of the Ninth Plan done by the Planning Commission, the JRY suffered from the following defects: Provided inadequate employment (only 11 days as per concurrent evaluation); Resources were spread too thin; Violation of material-labour norms and corruption (fudging of muster rolls); Projects were executed by contractors who sometimes hired outside labourers at lower wages.
There were similar deficiencies in the EAS.
In 2001, the JGSY and EAS were merged to form the Sampoorna Grameen Rojgar Yojana (SGRY). The objective of the scheme is to provide additional wage employment with food security in rural areas. Beneficiaries are temporarily employed to build community assets and infrastructure. The cost of the scheme, which includes the distribution of foodgrain, is shared by the Central and State governments in a ratio of 87.5:12.5.
In August 2005, the Indian Parliament passed the National Rural Employment Guarantee Act (NREGA), one of independent India’s most ambitious interventions to address rural poverty and empower poor people.
The NREGA follows a set of legally enforceable employment norms. Its aim is to end food insecurity, empower village communities, and create useful assets in rural areas. It is based on the assumption that every adult has a right to basic employment opportunities at the statutory minimum wage.
Under the scheme, one member of every poor rural family is guaranteed 100 days of work at the minimum wage of Rs 60 a day. All rural poor are eligible, not just those designated below the poverty line (BPL). One-third of the beneficiaries must be women. If five or more children accompany their mothers to any site, the implementing authority must appoint a woman to look after them on the site.
Panchayats at district, intermediate and village levels will identify and monitor the project, together with a programme officer. Social audits of the work will be available at gram sabhas. Work will, as far as possible, be provided within a radius of 5 km.
The work to be undertaken will be public works such as water harvesting, drought-proofing, micro and macro irrigation works, renovation of traditional water bodies, flood control barriers and rural connectivity.
Medical costs necessitated by injuries at work will be borne by the implementing authority.
Area development programmes
Drought Prone Area Programmes (DPAP), Desert Development Programmes (DDP), Hilly Area Development Programmes and Tribal Area Development Programmes were introduced in the 1970s to prevent environmental degradation and provide employment to the poor in these regions.
In the mid-‘90s, the environment management aspect of these programmes was strengthened by the introduction of watershed development programmes.
Currently, several Central government, State government and non-government watershed development programmes are being implemented.
The government has mooted a “single national initiative” under the National Watershed Development Projects for Rain-fed Areas (NWDPRA) programme. A new Department of Land Resources has been created by merging all area development programmes with the Department of Wasteland Development.
The Tenth Plan has a new scheme called the Rashtriya Sam Vikas Yojana(RSVY) to tackle the problem of extreme deprivation in backward pockets of the country.
Started with an outlay of Rs 2,500 crore for 2002-03, the RSVY aims to promote focused developmental programmes for backward areas that would help reduce imbalances, speed up development and help backward areas overcome poverty. The programme also aims to encourage states to take up productivity-enhancing reforms.
Social security programmes
Social security programmes were launched, at the national level, in the 1980s with an old age pension scheme. Currently, there are four major national social security schemes:
—National Old Age Pension Scheme (NOAPS), which provides a pension to people above the age of 65 with no source of income or financial support.
—National Family Benefit Scheme, which provides Rs 10,000 to families living below the poverty line when their main earning member dies.
—National Maternity Benefit Scheme, which provides Rs 500 to pregnant women of families living below the poverty line.
—Rural Group Insurance Scheme, which provides a maximum life insurance of Rs 5,000 covering the main earning members of families living below the poverty line on a group insurance basis; the government pays half the premium of Rs 50-Rs 70.
Other programmes
The largest of the 'other' programmes is the Indira Awaas Yojana (IAY), which provides houses free of cost to below the poverty line scheduled caste and scheduled tribe families living in rural areas. Recently, several other poverty alleviation programmes have been launched, including Pradhan Mantri Gramodaya Yojana, which provides additional funds to States so that they can provide basic minimum services such as primary health, primary education and drinking water.
Under the Pradhan Mantri Gramodaya Yojana there are two schemes, Gramin Awas for rural shelter and the Rural Drinking Water Project for water conservation in DPAP and DDP programme areas.
Pradhan Mantri Gram Sadak Yojana, launched in December 2000, to provide road connectivity to 1.6 lakh remote habitations with a population of over 500 by the end of the Tenth Plan period
Antyodaya Anna Yojana, launched in December 2001, to provide 25 kg of foodgrain at highly subsidized rates to 100 million of India's poorest families living below the poverty line. In 2002, around 24 lakh tonnes of foodgrain were provided by the central government under this scheme.
The Annapurna Scheme to provide 10 kg of foodgrain per month free of cost to persons who are eligible for pension under the NOAPS but haven’t received any.
Swarnajayanti Gram Swarojgar Yojna:
This programme was launched in April, 1999. This is a holistic programme covering all aspects of self employment such as organisation of the poor into self help groups, training, credit, technology, infrastructure and marketing.
The objective of SGSY is to provide sustainable income to the rural poor. The programme aims at establishing a large number of micro-enterprises in the rural areas, based upon the potential of the rural poor. It is envisaged that every family assisted under SGSY will be brought above the poverty-line with in a period of three years.
This programme covers families below poverty line in rural areas of the country. Within this target group, special safeguards have been provided by reserving 50% of benefits for SCs/STs, 40% for women and 3% for physically handicapped persons. Subject to the availability of the funds, it is proposed to cover 30% of the rural poor in each block in the next 5 years.
SGSY is a Centrally Sponsored Scheme and funding is shared by the Central and State Governments in the ratio of 75:25 respectively.
SGSY is a Credit-cum-Subsidy programme. It covers all aspects of self-employment, such as organisation of the poor into self-help groups, training, credit technology, infrastructure and marketing. Efforts would be made to involve women members in each self-help group. SGSY lays emphasis on activity clusters. Four-five activities will be identified for each block with the approval of Panchayat Samities. The Gram sabha will authenticate the list of families below the poverty line identified in BPL census. Identification of individual families suitable for each key activity will be made through a participatory process. Closer attention will be paid on skill development of the beneficiaries, known as swarozgaris, and their technology and marketing needs.
Jawahar Gram Samriddhi Yojna:
The critical importance of rural infrastructure in the development of village economy is well known. A number of steps have been initiated by the Central as well as the State Governments for building the rural infrastructure. The public works programme have also contributed significantly in this direction.
Jawahar Gram Samridhi Yojna (JGSY) is the restructured, streamlined and comprehensive version of the erstwhile Jawahar Rozagar Yojana. Designed to improve the quality of life of the poor, JGSY has been launched on 1st April, 1999. The primary objective of the JGSY is the creation of demand driven community village infrastructure including durable assets at the village level and assets to enable the rural poor to increase the opportunities for sustained employment. The secondary objective is the generation of supplementary employment for the unemployed poor in the rural areas. The wage employment under the programme shall be given to Below Poverty Line(BPL) families.
JGSY is implemented entirely at the village Panchayat level. Village Panchayat is the sole authority for preparation of the Annual Plan and its implementation.
The programme is implemented as Centrally Sponsored Scheme on cost sharing basis between the Centre and the State in the ratio of 75:25 respectively.
The programme is to be implemented by the Village Panchayats with the approval of Gram sabha. No other administrative or technical approval is required.
Indira Aawas Yojna:
IAY is the flagship rural housing scheme which is being implemented by the Government of India with an aim of providing shelter to the poor below poverty line. The Government of India has decided that allocation of funds under IAY will be on the basis of poverty ratio and housing shortage.
The objective of IAY is primarily to help construction of new dwelling units as well as conversion of unserviceable kutcha houses into pucca/semi-pucca by members of SC/STs, freed bonded labourers and also non-SC/ST rural poor below the poverty line by extending them grant-in-aid.
IAY is a beneficiary-oriented programme aimed at providing houses for SC/ST households who are victims of atrocities, households headed by widows/unmarried women and SC/ST households who are below the poverty line. This scheme has been in effect from 1st April, 1999.
IAY is a Centrally Sponsored Scheme funded on cost sharing basis between the government of India and the States in the ratio of 75:25 respectively.
Grant of Rs. 20,000 per unit is provided in the plain areas and Rs. 22,000 in hilly/difficult areas for the construction of a house. For conversion of a kutcha house into in pucca house, Rs. 10,000 is provided. Sanitary laterines and chulahs are integral part of the house. In construction/upgradation of the house, cost effective and environment friendly technologies, materials and designs are encouraged. The household is allotted in the name of a female member of beneficiary household.
DRDA Administration:
District Rural Development Agency (DRDA) has traditionally been the principal organ at the District level to oversee the implementation of the anti-poverty programmes of the Ministry of Rural Development. Created originally for implementation of Integrated Rural Development Programme (IRDP), the DRDAs were subsequently entrusted with a number of programmes, both of the Central and State governments. Since inception, the administrative costs of the DRDA (District Rural Development Agency) were met by setting aside a part of the allocations for each programme. Of late, the number of programmes had increased and several programmes have been restructured with a view to making them more effective. While an indicative staffing structure was provided to the DRDAs, experience showed that there was no uniformity in the staffing structure. It is in this context that a new centrally sponsored scheme—DRDA Administration—was introduced from April 1, 1999, based on the recommendations of an inter-ministerial committee known as Shankar Committee. The new scheme replaced the earlier practice of allocating percentage of programme funds to the administrative costs.
The objective of the scheme of DRDA (District Rural Development Agency) Administration is to strengthen the DRDAs and to make them more professional and effective. Under the scheme, DRDA is visualised as specialised agency capable of managing anti-poverty programmes of the Ministry on the one hand and effectively relate these to the overall efforts of poverty eradication in the district on the other.
The funding pattern of the programme is in the ratio of 75:25 between the Centre and the States.
The DRDA will continue to watch over and ensure effective utilisation of the funds intended for anti-poverty programmes. It will need to develop distinctive capabilities for poverty eradication. It will perform tasks which are different from Panchayati Raj Institutions and line departments. The DRDAs would deal only with the anti-poverty programmes of the Ministry of Rural Development. If DRDAs are to be entrusted with programmes of other Ministries or those of the State Governments, it must be ensured that these have a definite anti-poverty focus. In respect of such States where DRDA does not have a separate identity and separate accounts.
Basic Minimum Services:
The Government of India launched this scheme in 1997 incorporating seven vital services of importance to common people. The State Government has opted to provide shelter to shelter-less below poverty line under this scheme.
The objective of providing this scheme is to supplement the constitution of dwelling units for members of SC/ST, freed bonded labour and also non-SC/ST rural poor below the poverty line by providing them with grant.
The Central government provides additional funds for Basic Minimum Services subject to the condition that the State government will provide 15% of the required funds.
Additional Indira Awas are being constructed with the guidelines analogous to that for the Awas Yojana. The salient features are:
—Rs. 20,000 is provided to the beneficiaries for construction of the houses in phases. Sanitary latrines and smokeless chulah are integral part of the houses.
—Houses are allotted in the name of female members of the family or in joint names of both spouses.
—Selection of construction technology, materials and design is left entirely to the choice of beneficiaries. Contractors, Middlemen or the Departmental Agencies have no role in the construction of houses.
—Cost effective and environment friendly housing technologies/design and materials are provided.
Drought-Prone Areas Programme:
The Drought Prone Areas Programme (DPAP) aims at mitigating the adverse effects of drought on the production of crops and livestock and productivity of land, water and human resources. It strives to encourage restoration of ecological balance and seeks to improve the economic and social conditions of the poor and the disadvantaged sections of the rural community.
DPAP is a people's programme with government assistance. There is a special arrangement for maintenance of assets and social audit by Panchayati Raj Institutions. Development of all categories of land belonging to Gram Panchayats, Government and individuals fall within the limits of the selected watersheds for development.
Allocation is to be shared equally by the Centre and State government on 75:25 basis. Watershed community is to contribute for maintenance of assets created. Utilisation of 50% of allocation under the Employment Assurance Scheme (EAS) is for the watershed development. Funds are directly released to Zila Parishads/District Rural Development Agencies (DRDAs) to sanction projects and release funds to Watershed Committees and Project Implementation Agencies.
Village community, including self-help/user groups, undertake area development by planning and implementation of projects on watershed basis through Watershed Associations and Watershed Committees constituted from among themselves. The Government supplements their work by creating social awareness, imparting training and providing technical support through project implementation agencies.
Credit-cum-Subsidy Scheme for Rural Housing:
There were a large number of households in the rural areas which could not be covered under the IAY, as either they do not fall into the range of eligibility or due to the limits imposed by the available budget. On the other hand due to limited repayment capacity, these rural households cannot take benefit of fully loan based schemes offered by some of the housing finance institutions. The need of this majority can be met through a scheme which is part credit and part subsidy based.
The objective of this scheme for rural housing is to facilitate construction of houses for rural families who have some repayment capacity. The scheme aims at eradicating shelter-lessness from the rural area of the country.
The scheme provides shelter to rural families who have not been coveted under IAY and who are desirous of possessing a house. All rural households having annual income up to Rs. 32,000 are covered under this scheme.
The funds are shared by the Centre and the State in the ratio of 75:25, respectively.
Poor just above the poverty line are entitled to get the benefits of the scheme. A maximum subsidy of Rs. 10,000 per unit is provided for the construction of a house. Sanitary latrine and smokeless chulha are integral part of the house. Cost effective and environment friendly technologies, materials, designs, etc. are encouraged. Sixty per cent (60%) of the houses are allocated to SC/ST rural poor.
Appraisal of Anti-poverty programmes
On review of all the poverty alleviation programmes, one gets the impression that these programmes are not benefiting the poor in terms of increasing their income. For example, the PDS is plagued with seepage, corruption, high administrative cost and targeting errors. Self-employment are better utilized by the non-poor or those who are above BPL. Wage employment programme is caught in red-tapism and administrative delays leading to poor utilization of the allocated funds. All these factors have been used by some economists to argue against these programmes and to suggest the winding up the programmes.
Looking at purely narrow economic point of view is not the right approach to poverty alleviation. Poverty does not mean not having enough income alone. Poverty means not having access to a whole lot of services like education, health services, water supply, sanitation and so on. It also means loss of status in the community, exclusion from certain social functions, and a sense of inferiority in the group or community. In short, poverty means marginalization of an individual or household in the community.
There is no denial that poverty alleviation programmes should lead to high income to the poor, but to come out of the culture of poverty, one needs to be empowered and also requires access to basic services. While some of the poverty alleviation programmes may not be performing well in terms of utilizing the allocated funds and increasing the income of the poor, these programmes have contributed to the social arena of poverty. For example, wage employment programme was not very successful in terms of utilizing the allocated resources and generating additional employment for the BPL. But this programme has created village level assets and infrastructure in terms of schools, health centers, roads and ponds.
Similarly, Self-help Groups (SHGs) formed by the women has given them tremendous confidence and empowered them to become entrepreneurs. Today, SHGs are not only active in creating micro-enterprises but also they are involved in implementing community programmes like immunization programmes, literacy programmes and so on. Some of them have empowered to the level of contesting panchayat elections and become members of Panchayat Raj Institutions (PRI). Again, there is no denial that all these cannot be achieved without an increase in income. Therefore, the economic and social aspects of poverty alleviation are interlinked to one another. Economic upliftment alone cannot alleviate poverty but it must lead to social upliftment in terms of access to services, empowerment and independence. Therefore, the current poverty alleviation programmes in the country should broaden their focus and goal in addition to increasing income to achieve the target of removing poverty from the country.
Also, involvement of the local communities is key to the success of poverty alleviation programmes. In the absence of community involvement, the programmes are plagued with bureaucratic muddle and corruption at every level. Unfortunately, States still lag behind handing over these programmes to Panchayati Raj Institutions (PRIs). While PRIs are created in most of the States and elections are held, these institutions are not given the financial resources, administrative powers and the capacity to run programmes. State governments still hold the financial powers and the PRI is not in a position to plan and decide based on their needs. The administrative machinery of the PRI is very week to carry out these national level programmes. Also, the PRI does not have the capacity to handle resources and technical capacity to implement programmes. These issues have to be addressed immediately to strengthen PRI to implement poverty alleviation programmes.
Apart from decentralization and community involvement, participation of the poor in the programme that affects their welfare, is important. Some of the self-employment schemes failed to take off because no effort was made to involve the poor in identifying the skills which they can learn easily. Some of the skills imbibed may not have job potential in the community. On the positive side, micro-enterprise under the self-employment programme was successful because of the role of SHGs. The SHG members actively participated in the whole process and decided for themselves for the kind of skills they wanted to learn and also the kind of credit they needed from the bank to start the microenterprise. Many well-intentioned programmes fail to take off because of lack of understanding of the ground realities due to lack of participation of the beneficiaries.
At the macro-level, there is a need to co-ordinate a myriad of poverty alleviation programmes of the central government and the State governments. The transfer of central funds to the States for different programmes should be efficient. Currently, such funds and goods like foodgrains are not fully utilized by the States. There is a need to strengthen the financial management capacity of certain States to use the funds efficiently. These are the States where the percentage of the BPL is more than the national average.
Poverty is more of social marginalization of an individual, household or group in the community/society rather than inadequacy of income to fulfill the basic needs. Indeed, inadequate income is one of the factors of marginalization, but not the sole factor. The poverty alleviation programmes should not aim merely to increase the income level of individual, household or group, but mainstreaming marginalized in the development process of the country.
High volume of high quality goods and services are produced with fewer labour hands. In short, the modern economy is not generating much employment and sometimes it displaces and replaces labour with machines and tools. The period of 1999-2000 to 2004- 2005 saw rapid economic growth in the country but it has not impacted on the unemployment problem of the country. During this period, the unemployment rate remained almost same for rural males and decreased by just one percentage for urban male. On the other hand, unemployment among females increased by one percentage for urban and rural females.
One-third of the country’s population is still illiterate and a majority are not educated up to the age of 15 years. Even among the educated, all do not have employable skills of the modern economy. The education system is not tuned to the changing economic scenario. The large agriculture workforce in rural areas is not sustainable with dwindling cultivable land and use of modern methods of cultivation. As a result, the rural labour is pushed into cities in search of work but they do not have any employable skills in the urban formal sector often end up doing odd jobs in urban areas.
Urbanization in this country is mainly due to acute poverty in rural areas, rather than due to the economic opportunities in urban areas. Further, poverty is not uniformly spread in the country. States like Orissa, Bihar and Madhya Pradesh have high level of poverty and the levels have not come down significantly in the post-economic reform era.
It is also pertinent to understand that some of the people are unable to be part of the economic reform and do not have the capacity to participate in the economic development process. Such groups need government intervention to ensure that they are not left behind in the development process and deprived of the benefits because they do not have the capacity to be part of the global economy. The government needs to develop safety nets for such groups and try to mainstream them in the development process. They need welfare measures in the form of poverty alleviation programmes to ensure that they survive, if not prosper, in this era of economic reform. Further, the poor are not a homogeneous population and their capacity to survive the economic reform varied from one group of poor to another. Especially, those who are below the poverty line or the poorest among the poor need more government help.
The government of India's poverty alleviation programmes can be broadly classified under five categories: (a) Self-employment programmes like the Swarnajayanti Gram Swarojgar Yojana; (b) Wage-employment programmes like the Sampoorna Grameen Rojgar Yojana and the National Rural Employment Guarantee (NREG) scheme; (c) Area development programmes like Drought Prone Area Programmes and the Rashtriya Sam Vikas Yojana; (d) Social security programmes like the National Old Age Pension Scheme; (e) Other programmes like the Indira Awaas Yojana.
Self-employment programmes
Self-employment programmes were introduced at the national level in the late 1970s. Initially, the programmes were designed to provide skills, subsidized credit and infrastructure support to small farmers and agricultural labourers so that they could find new sources of income.
In the 1980s, the focus of the self-employment programmes was extended to cover target groups such as scheduled castes and tribes, women and rural artisans. The coverage also extended to specific areas such as animal husbandry, forestry and fishery.
The largest of these programmes was the Integrated Rural Development Programme (IRDP). According to a mid-term appraisal of the Ninth Plan done by the Planning Commission, the IRDP suffered from several defects including: sub-critical investment, unviable projects, illiterate and unskilled beneficiaries with no experience in managing an enterprise, indifferent delivery of credit by banks, overcrowding of lending in certain projects such as dairy, under-emphasis on activities like trading, service and even simple processing, poor targeting and selection of non-poor, rising indebtedness, and scale of IRDP outstripping capacity of government and banks.
Other self-employment programmes suffered from similar deficiencies.
In 1999, several self-employment programmes were integrated into the Swarnajayanti Gram Swarojgar Yojana (SGSY). The key feature of the SGSY is that it does not seek to promote individual economic activities. It seeks to promote self-help groups that are trained in specific skills so they can formulate microenterprise proposals. Such projects are based on activities that are identified for each block on the basis of local resources, skills and markets. The projects are supported by bank credit and government subsidies.
While the SGSY is implemented by district rural development agencies through panchayat samitis, NGOs are expected to play a major role in the success of the programme.
Wage-employment programmes
The first major wage-employment programme was introduced in the 1960s to provide employment to the rural unemployed particularly during the lean agricultural season.
Subsequently, several wage-employment programmes were launched by the Central and State governments. The largest of these was the Jawahar Rozgar Yojana (JRY), which was redesigned in 1999 as the Jawahar Gram Samridhhi Yojana (JGSY).
Other notable schemes were: the Employment Assurance Scheme (EAS), and the Employment Guarantee Scheme of the Maharashtra government.
According to a mid-term appraisal of the Ninth Plan done by the Planning Commission, the JRY suffered from the following defects: Provided inadequate employment (only 11 days as per concurrent evaluation); Resources were spread too thin; Violation of material-labour norms and corruption (fudging of muster rolls); Projects were executed by contractors who sometimes hired outside labourers at lower wages.
There were similar deficiencies in the EAS.
In 2001, the JGSY and EAS were merged to form the Sampoorna Grameen Rojgar Yojana (SGRY). The objective of the scheme is to provide additional wage employment with food security in rural areas. Beneficiaries are temporarily employed to build community assets and infrastructure. The cost of the scheme, which includes the distribution of foodgrain, is shared by the Central and State governments in a ratio of 87.5:12.5.
In August 2005, the Indian Parliament passed the National Rural Employment Guarantee Act (NREGA), one of independent India’s most ambitious interventions to address rural poverty and empower poor people.
The NREGA follows a set of legally enforceable employment norms. Its aim is to end food insecurity, empower village communities, and create useful assets in rural areas. It is based on the assumption that every adult has a right to basic employment opportunities at the statutory minimum wage.
Under the scheme, one member of every poor rural family is guaranteed 100 days of work at the minimum wage of Rs 60 a day. All rural poor are eligible, not just those designated below the poverty line (BPL). One-third of the beneficiaries must be women. If five or more children accompany their mothers to any site, the implementing authority must appoint a woman to look after them on the site.
Panchayats at district, intermediate and village levels will identify and monitor the project, together with a programme officer. Social audits of the work will be available at gram sabhas. Work will, as far as possible, be provided within a radius of 5 km.
The work to be undertaken will be public works such as water harvesting, drought-proofing, micro and macro irrigation works, renovation of traditional water bodies, flood control barriers and rural connectivity.
Medical costs necessitated by injuries at work will be borne by the implementing authority.
Area development programmes
Drought Prone Area Programmes (DPAP), Desert Development Programmes (DDP), Hilly Area Development Programmes and Tribal Area Development Programmes were introduced in the 1970s to prevent environmental degradation and provide employment to the poor in these regions.
In the mid-‘90s, the environment management aspect of these programmes was strengthened by the introduction of watershed development programmes.
Currently, several Central government, State government and non-government watershed development programmes are being implemented.
The government has mooted a “single national initiative” under the National Watershed Development Projects for Rain-fed Areas (NWDPRA) programme. A new Department of Land Resources has been created by merging all area development programmes with the Department of Wasteland Development.
The Tenth Plan has a new scheme called the Rashtriya Sam Vikas Yojana(RSVY) to tackle the problem of extreme deprivation in backward pockets of the country.
Started with an outlay of Rs 2,500 crore for 2002-03, the RSVY aims to promote focused developmental programmes for backward areas that would help reduce imbalances, speed up development and help backward areas overcome poverty. The programme also aims to encourage states to take up productivity-enhancing reforms.
Social security programmes
Social security programmes were launched, at the national level, in the 1980s with an old age pension scheme. Currently, there are four major national social security schemes:
—National Old Age Pension Scheme (NOAPS), which provides a pension to people above the age of 65 with no source of income or financial support.
—National Family Benefit Scheme, which provides Rs 10,000 to families living below the poverty line when their main earning member dies.
—National Maternity Benefit Scheme, which provides Rs 500 to pregnant women of families living below the poverty line.
—Rural Group Insurance Scheme, which provides a maximum life insurance of Rs 5,000 covering the main earning members of families living below the poverty line on a group insurance basis; the government pays half the premium of Rs 50-Rs 70.
Other programmes
The largest of the 'other' programmes is the Indira Awaas Yojana (IAY), which provides houses free of cost to below the poverty line scheduled caste and scheduled tribe families living in rural areas. Recently, several other poverty alleviation programmes have been launched, including Pradhan Mantri Gramodaya Yojana, which provides additional funds to States so that they can provide basic minimum services such as primary health, primary education and drinking water.
Under the Pradhan Mantri Gramodaya Yojana there are two schemes, Gramin Awas for rural shelter and the Rural Drinking Water Project for water conservation in DPAP and DDP programme areas.
Pradhan Mantri Gram Sadak Yojana, launched in December 2000, to provide road connectivity to 1.6 lakh remote habitations with a population of over 500 by the end of the Tenth Plan period
Antyodaya Anna Yojana, launched in December 2001, to provide 25 kg of foodgrain at highly subsidized rates to 100 million of India's poorest families living below the poverty line. In 2002, around 24 lakh tonnes of foodgrain were provided by the central government under this scheme.
The Annapurna Scheme to provide 10 kg of foodgrain per month free of cost to persons who are eligible for pension under the NOAPS but haven’t received any.
Swarnajayanti Gram Swarojgar Yojna:
This programme was launched in April, 1999. This is a holistic programme covering all aspects of self employment such as organisation of the poor into self help groups, training, credit, technology, infrastructure and marketing.
The objective of SGSY is to provide sustainable income to the rural poor. The programme aims at establishing a large number of micro-enterprises in the rural areas, based upon the potential of the rural poor. It is envisaged that every family assisted under SGSY will be brought above the poverty-line with in a period of three years.
This programme covers families below poverty line in rural areas of the country. Within this target group, special safeguards have been provided by reserving 50% of benefits for SCs/STs, 40% for women and 3% for physically handicapped persons. Subject to the availability of the funds, it is proposed to cover 30% of the rural poor in each block in the next 5 years.
SGSY is a Centrally Sponsored Scheme and funding is shared by the Central and State Governments in the ratio of 75:25 respectively.
SGSY is a Credit-cum-Subsidy programme. It covers all aspects of self-employment, such as organisation of the poor into self-help groups, training, credit technology, infrastructure and marketing. Efforts would be made to involve women members in each self-help group. SGSY lays emphasis on activity clusters. Four-five activities will be identified for each block with the approval of Panchayat Samities. The Gram sabha will authenticate the list of families below the poverty line identified in BPL census. Identification of individual families suitable for each key activity will be made through a participatory process. Closer attention will be paid on skill development of the beneficiaries, known as swarozgaris, and their technology and marketing needs.
Jawahar Gram Samriddhi Yojna:
The critical importance of rural infrastructure in the development of village economy is well known. A number of steps have been initiated by the Central as well as the State Governments for building the rural infrastructure. The public works programme have also contributed significantly in this direction.
Jawahar Gram Samridhi Yojna (JGSY) is the restructured, streamlined and comprehensive version of the erstwhile Jawahar Rozagar Yojana. Designed to improve the quality of life of the poor, JGSY has been launched on 1st April, 1999. The primary objective of the JGSY is the creation of demand driven community village infrastructure including durable assets at the village level and assets to enable the rural poor to increase the opportunities for sustained employment. The secondary objective is the generation of supplementary employment for the unemployed poor in the rural areas. The wage employment under the programme shall be given to Below Poverty Line(BPL) families.
JGSY is implemented entirely at the village Panchayat level. Village Panchayat is the sole authority for preparation of the Annual Plan and its implementation.
The programme is implemented as Centrally Sponsored Scheme on cost sharing basis between the Centre and the State in the ratio of 75:25 respectively.
The programme is to be implemented by the Village Panchayats with the approval of Gram sabha. No other administrative or technical approval is required.
Indira Aawas Yojna:
IAY is the flagship rural housing scheme which is being implemented by the Government of India with an aim of providing shelter to the poor below poverty line. The Government of India has decided that allocation of funds under IAY will be on the basis of poverty ratio and housing shortage.
The objective of IAY is primarily to help construction of new dwelling units as well as conversion of unserviceable kutcha houses into pucca/semi-pucca by members of SC/STs, freed bonded labourers and also non-SC/ST rural poor below the poverty line by extending them grant-in-aid.
IAY is a beneficiary-oriented programme aimed at providing houses for SC/ST households who are victims of atrocities, households headed by widows/unmarried women and SC/ST households who are below the poverty line. This scheme has been in effect from 1st April, 1999.
IAY is a Centrally Sponsored Scheme funded on cost sharing basis between the government of India and the States in the ratio of 75:25 respectively.
Grant of Rs. 20,000 per unit is provided in the plain areas and Rs. 22,000 in hilly/difficult areas for the construction of a house. For conversion of a kutcha house into in pucca house, Rs. 10,000 is provided. Sanitary laterines and chulahs are integral part of the house. In construction/upgradation of the house, cost effective and environment friendly technologies, materials and designs are encouraged. The household is allotted in the name of a female member of beneficiary household.
DRDA Administration:
District Rural Development Agency (DRDA) has traditionally been the principal organ at the District level to oversee the implementation of the anti-poverty programmes of the Ministry of Rural Development. Created originally for implementation of Integrated Rural Development Programme (IRDP), the DRDAs were subsequently entrusted with a number of programmes, both of the Central and State governments. Since inception, the administrative costs of the DRDA (District Rural Development Agency) were met by setting aside a part of the allocations for each programme. Of late, the number of programmes had increased and several programmes have been restructured with a view to making them more effective. While an indicative staffing structure was provided to the DRDAs, experience showed that there was no uniformity in the staffing structure. It is in this context that a new centrally sponsored scheme—DRDA Administration—was introduced from April 1, 1999, based on the recommendations of an inter-ministerial committee known as Shankar Committee. The new scheme replaced the earlier practice of allocating percentage of programme funds to the administrative costs.
The objective of the scheme of DRDA (District Rural Development Agency) Administration is to strengthen the DRDAs and to make them more professional and effective. Under the scheme, DRDA is visualised as specialised agency capable of managing anti-poverty programmes of the Ministry on the one hand and effectively relate these to the overall efforts of poverty eradication in the district on the other.
The funding pattern of the programme is in the ratio of 75:25 between the Centre and the States.
The DRDA will continue to watch over and ensure effective utilisation of the funds intended for anti-poverty programmes. It will need to develop distinctive capabilities for poverty eradication. It will perform tasks which are different from Panchayati Raj Institutions and line departments. The DRDAs would deal only with the anti-poverty programmes of the Ministry of Rural Development. If DRDAs are to be entrusted with programmes of other Ministries or those of the State Governments, it must be ensured that these have a definite anti-poverty focus. In respect of such States where DRDA does not have a separate identity and separate accounts.
Basic Minimum Services:
The Government of India launched this scheme in 1997 incorporating seven vital services of importance to common people. The State Government has opted to provide shelter to shelter-less below poverty line under this scheme.
The objective of providing this scheme is to supplement the constitution of dwelling units for members of SC/ST, freed bonded labour and also non-SC/ST rural poor below the poverty line by providing them with grant.
The Central government provides additional funds for Basic Minimum Services subject to the condition that the State government will provide 15% of the required funds.
Additional Indira Awas are being constructed with the guidelines analogous to that for the Awas Yojana. The salient features are:
—Rs. 20,000 is provided to the beneficiaries for construction of the houses in phases. Sanitary latrines and smokeless chulah are integral part of the houses.
—Houses are allotted in the name of female members of the family or in joint names of both spouses.
—Selection of construction technology, materials and design is left entirely to the choice of beneficiaries. Contractors, Middlemen or the Departmental Agencies have no role in the construction of houses.
—Cost effective and environment friendly housing technologies/design and materials are provided.
Drought-Prone Areas Programme:
The Drought Prone Areas Programme (DPAP) aims at mitigating the adverse effects of drought on the production of crops and livestock and productivity of land, water and human resources. It strives to encourage restoration of ecological balance and seeks to improve the economic and social conditions of the poor and the disadvantaged sections of the rural community.
DPAP is a people's programme with government assistance. There is a special arrangement for maintenance of assets and social audit by Panchayati Raj Institutions. Development of all categories of land belonging to Gram Panchayats, Government and individuals fall within the limits of the selected watersheds for development.
Allocation is to be shared equally by the Centre and State government on 75:25 basis. Watershed community is to contribute for maintenance of assets created. Utilisation of 50% of allocation under the Employment Assurance Scheme (EAS) is for the watershed development. Funds are directly released to Zila Parishads/District Rural Development Agencies (DRDAs) to sanction projects and release funds to Watershed Committees and Project Implementation Agencies.
Village community, including self-help/user groups, undertake area development by planning and implementation of projects on watershed basis through Watershed Associations and Watershed Committees constituted from among themselves. The Government supplements their work by creating social awareness, imparting training and providing technical support through project implementation agencies.
Credit-cum-Subsidy Scheme for Rural Housing:
There were a large number of households in the rural areas which could not be covered under the IAY, as either they do not fall into the range of eligibility or due to the limits imposed by the available budget. On the other hand due to limited repayment capacity, these rural households cannot take benefit of fully loan based schemes offered by some of the housing finance institutions. The need of this majority can be met through a scheme which is part credit and part subsidy based.
The objective of this scheme for rural housing is to facilitate construction of houses for rural families who have some repayment capacity. The scheme aims at eradicating shelter-lessness from the rural area of the country.
The scheme provides shelter to rural families who have not been coveted under IAY and who are desirous of possessing a house. All rural households having annual income up to Rs. 32,000 are covered under this scheme.
The funds are shared by the Centre and the State in the ratio of 75:25, respectively.
Poor just above the poverty line are entitled to get the benefits of the scheme. A maximum subsidy of Rs. 10,000 per unit is provided for the construction of a house. Sanitary latrine and smokeless chulha are integral part of the house. Cost effective and environment friendly technologies, materials, designs, etc. are encouraged. Sixty per cent (60%) of the houses are allocated to SC/ST rural poor.
Appraisal of Anti-poverty programmes
On review of all the poverty alleviation programmes, one gets the impression that these programmes are not benefiting the poor in terms of increasing their income. For example, the PDS is plagued with seepage, corruption, high administrative cost and targeting errors. Self-employment are better utilized by the non-poor or those who are above BPL. Wage employment programme is caught in red-tapism and administrative delays leading to poor utilization of the allocated funds. All these factors have been used by some economists to argue against these programmes and to suggest the winding up the programmes.
Looking at purely narrow economic point of view is not the right approach to poverty alleviation. Poverty does not mean not having enough income alone. Poverty means not having access to a whole lot of services like education, health services, water supply, sanitation and so on. It also means loss of status in the community, exclusion from certain social functions, and a sense of inferiority in the group or community. In short, poverty means marginalization of an individual or household in the community.
There is no denial that poverty alleviation programmes should lead to high income to the poor, but to come out of the culture of poverty, one needs to be empowered and also requires access to basic services. While some of the poverty alleviation programmes may not be performing well in terms of utilizing the allocated funds and increasing the income of the poor, these programmes have contributed to the social arena of poverty. For example, wage employment programme was not very successful in terms of utilizing the allocated resources and generating additional employment for the BPL. But this programme has created village level assets and infrastructure in terms of schools, health centers, roads and ponds.
Similarly, Self-help Groups (SHGs) formed by the women has given them tremendous confidence and empowered them to become entrepreneurs. Today, SHGs are not only active in creating micro-enterprises but also they are involved in implementing community programmes like immunization programmes, literacy programmes and so on. Some of them have empowered to the level of contesting panchayat elections and become members of Panchayat Raj Institutions (PRI). Again, there is no denial that all these cannot be achieved without an increase in income. Therefore, the economic and social aspects of poverty alleviation are interlinked to one another. Economic upliftment alone cannot alleviate poverty but it must lead to social upliftment in terms of access to services, empowerment and independence. Therefore, the current poverty alleviation programmes in the country should broaden their focus and goal in addition to increasing income to achieve the target of removing poverty from the country.
Also, involvement of the local communities is key to the success of poverty alleviation programmes. In the absence of community involvement, the programmes are plagued with bureaucratic muddle and corruption at every level. Unfortunately, States still lag behind handing over these programmes to Panchayati Raj Institutions (PRIs). While PRIs are created in most of the States and elections are held, these institutions are not given the financial resources, administrative powers and the capacity to run programmes. State governments still hold the financial powers and the PRI is not in a position to plan and decide based on their needs. The administrative machinery of the PRI is very week to carry out these national level programmes. Also, the PRI does not have the capacity to handle resources and technical capacity to implement programmes. These issues have to be addressed immediately to strengthen PRI to implement poverty alleviation programmes.
Apart from decentralization and community involvement, participation of the poor in the programme that affects their welfare, is important. Some of the self-employment schemes failed to take off because no effort was made to involve the poor in identifying the skills which they can learn easily. Some of the skills imbibed may not have job potential in the community. On the positive side, micro-enterprise under the self-employment programme was successful because of the role of SHGs. The SHG members actively participated in the whole process and decided for themselves for the kind of skills they wanted to learn and also the kind of credit they needed from the bank to start the microenterprise. Many well-intentioned programmes fail to take off because of lack of understanding of the ground realities due to lack of participation of the beneficiaries.
At the macro-level, there is a need to co-ordinate a myriad of poverty alleviation programmes of the central government and the State governments. The transfer of central funds to the States for different programmes should be efficient. Currently, such funds and goods like foodgrains are not fully utilized by the States. There is a need to strengthen the financial management capacity of certain States to use the funds efficiently. These are the States where the percentage of the BPL is more than the national average.
Poverty is more of social marginalization of an individual, household or group in the community/society rather than inadequacy of income to fulfill the basic needs. Indeed, inadequate income is one of the factors of marginalization, but not the sole factor. The poverty alleviation programmes should not aim merely to increase the income level of individual, household or group, but mainstreaming marginalized in the development process of the country.
Friday, June 8, 2012
SOCIO ECONOMIC AWARENESS PRACTICE MCQs
1. Under Microfinance, SHG stands for—
(A) Self High Group
(B) Self Help Group
(C) Saving High Group
(D) Self Help Goods
Answer: Self Help Group
2. What is the target of the Government of India for the year 2012-13 to the agriculture sector ?
(A) Rs. 575000 crore
(B) Rs. 4050000 crore
(C) Rs. 18500 crore
(D) Rs. 16390 crore
Answer: Rs. 575000 crore
3. The government has put a target of disbursing Rs. 575000 crore institutional credit to agriculture sector during—
(A) 2012-13
(B) 2013-14
(C) 2014-15
(D) 2016-17
Answer: 2012-13
4. The Banking Regulation (Amendment) Bill 2004 was introduced for—
(A) Privatisation of Bank
(B) Credit Control
(C) For removing 10% cup on voting rights and also encouraging foreign banks to set up subsidiaries and attract foreign investment
(D) Bank Rate
Answer: (C)
5. India Millennium Deposit (IMD) scheme was launched by the—
(A) SBI
(B) RBI
(C) UTI
(D) UBI
Answer: SBI
6. RBI announced its Monetary & credit policy 2012-13 on—
(A) January 1, 2012
(B) March 17, 2012
(C) April 17, 2012
(D) May 4, 2012
Answer: April 17, 2012
7. What is the base year of newly introduced Consumer Price Index (CPI) ?
(A) 2004-05
(B) 2010
(C) 2011
(D) 2012
Answer: 2010
8. Planning Commission has lowered the poverty line from `32 per day to—
(A) Rs. 28
(B) Rs.29
(C) Rs.30
(D) Rs.31
Answer: Rs.28
9. In Monetary and Credit Policy 2012-13, Cash Reserve ratio kept—
(A) At 7%
(B) At 8%
(C) At 4•75%
(D) At 9%
Answer: At 4•75%
10. In RBI's Monetary and Credit Policy 2012-13 (Announced on April 17, 2012)—
(A) GDP growth projection maintained at 10%
(B) Credit growth projection for 2012-13 cut to 8%.
(C) Money supply growth target reduced to 10%
(D) Repo rate reduced from 8•5% to 8•0%
Answer: Repo rate reduced from 8•5% to 8•0%
11. SLR refers to—
(A) That portion of total deposit of a commercial bank which it has to keep with itself in the form of case reserves
(B) Interest Rate
(C) Bank Rate
(D) Repo Rate
Answer: (A)
12. When RBI reduced SLR from 25% to 24% ?
(A) December 16, 2010
(B) July 1, 2011
(C) July 16, 2011
(D) October 1, 2011
Answer: December 16, 2010
13. Which is more closed to Base Rate of the Banks?
(A) Repo Rate
(B) Reverse Repo Rate
(C) PLR
(D) CRR
Answer: PLR
14. What is Bank Rate (As on April 17, 2012) ?
(A) 9•0% (B) 7 %
(C) 8% (D) 6%
Answer: 9•0%
15. On April 17, 2012 Repo Rate fixed at—
(A) 8•75%
(B) 8•25%
(C) 8•0%
(D) 8•50%
Answer: 8•0%
16. Which is not correct ?
(A) Bank Rate : 9•0 %
(B) Reverse Repo Rate : 7•0 %
(C) Repo Rate : 8•0 %
(D) SLR : 40%
Answer: SLR : 40%
17. At present how many commercial banks in Public Sector are working in the country ?
(A) 27
(B) 30
(C) 35
(D) 18
Answer: 27
18. Which bank is the largest Public Sector bank in the country ?
(A) Union Bank of India
(B) HDFC
(C) RBI
(D) SBI
Answer: SBI
19. Which is the largest Private Sector Bank in the country ?
(A) HDFC Bank
(B) ICICI Bank
(C) Kotak Mahindra Bank
(D) AXIS Bank
Answer: ICICI Bank
20. On June 30, 2011 how many branches of SBI and Group were working in the country ?
(A) 17976
(B) 18200
(C) 67300
(D) 62650
Answer: 17976
(A) Self High Group
(B) Self Help Group
(C) Saving High Group
(D) Self Help Goods
Answer: Self Help Group
2. What is the target of the Government of India for the year 2012-13 to the agriculture sector ?
(A) Rs. 575000 crore
(B) Rs. 4050000 crore
(C) Rs. 18500 crore
(D) Rs. 16390 crore
Answer: Rs. 575000 crore
3. The government has put a target of disbursing Rs. 575000 crore institutional credit to agriculture sector during—
(A) 2012-13
(B) 2013-14
(C) 2014-15
(D) 2016-17
Answer: 2012-13
4. The Banking Regulation (Amendment) Bill 2004 was introduced for—
(A) Privatisation of Bank
(B) Credit Control
(C) For removing 10% cup on voting rights and also encouraging foreign banks to set up subsidiaries and attract foreign investment
(D) Bank Rate
Answer: (C)
5. India Millennium Deposit (IMD) scheme was launched by the—
(A) SBI
(B) RBI
(C) UTI
(D) UBI
Answer: SBI
6. RBI announced its Monetary & credit policy 2012-13 on—
(A) January 1, 2012
(B) March 17, 2012
(C) April 17, 2012
(D) May 4, 2012
Answer: April 17, 2012
7. What is the base year of newly introduced Consumer Price Index (CPI) ?
(A) 2004-05
(B) 2010
(C) 2011
(D) 2012
Answer: 2010
8. Planning Commission has lowered the poverty line from `32 per day to—
(A) Rs. 28
(B) Rs.29
(C) Rs.30
(D) Rs.31
Answer: Rs.28
9. In Monetary and Credit Policy 2012-13, Cash Reserve ratio kept—
(A) At 7%
(B) At 8%
(C) At 4•75%
(D) At 9%
Answer: At 4•75%
10. In RBI's Monetary and Credit Policy 2012-13 (Announced on April 17, 2012)—
(A) GDP growth projection maintained at 10%
(B) Credit growth projection for 2012-13 cut to 8%.
(C) Money supply growth target reduced to 10%
(D) Repo rate reduced from 8•5% to 8•0%
Answer: Repo rate reduced from 8•5% to 8•0%
11. SLR refers to—
(A) That portion of total deposit of a commercial bank which it has to keep with itself in the form of case reserves
(B) Interest Rate
(C) Bank Rate
(D) Repo Rate
Answer: (A)
12. When RBI reduced SLR from 25% to 24% ?
(A) December 16, 2010
(B) July 1, 2011
(C) July 16, 2011
(D) October 1, 2011
Answer: December 16, 2010
13. Which is more closed to Base Rate of the Banks?
(A) Repo Rate
(B) Reverse Repo Rate
(C) PLR
(D) CRR
Answer: PLR
14. What is Bank Rate (As on April 17, 2012) ?
(A) 9•0% (B) 7 %
(C) 8% (D) 6%
Answer: 9•0%
15. On April 17, 2012 Repo Rate fixed at—
(A) 8•75%
(B) 8•25%
(C) 8•0%
(D) 8•50%
Answer: 8•0%
16. Which is not correct ?
(A) Bank Rate : 9•0 %
(B) Reverse Repo Rate : 7•0 %
(C) Repo Rate : 8•0 %
(D) SLR : 40%
Answer: SLR : 40%
17. At present how many commercial banks in Public Sector are working in the country ?
(A) 27
(B) 30
(C) 35
(D) 18
Answer: 27
18. Which bank is the largest Public Sector bank in the country ?
(A) Union Bank of India
(B) HDFC
(C) RBI
(D) SBI
Answer: SBI
19. Which is the largest Private Sector Bank in the country ?
(A) HDFC Bank
(B) ICICI Bank
(C) Kotak Mahindra Bank
(D) AXIS Bank
Answer: ICICI Bank
20. On June 30, 2011 how many branches of SBI and Group were working in the country ?
(A) 17976
(B) 18200
(C) 67300
(D) 62650
Answer: 17976
Tuesday, June 5, 2012
Bihar topped in Gross State Domestic Product with 13.1 Per Cent Growth in 2011-12
According to data released by Ministry of Statistics of India on 1
June 2012, Bihar emerged as the state with highest economic growth rate
in the country. The state which until recently was synonymous with
poverty, recorded an impressive 13.1 per cent growth in 2011-12. Bihar
topped the list for second consecutive year. The state’s economy even
surpassed the Punjab on the back of four years of double-digit growth.
The state was closely followed by Delhi and Puducherry. Chhattisgadh and Goa were the other two states in the list of top five states. Tamil Nadu and Gujarat, the two highly industrialized states registered the growth of 9.4 per cent and 9.1 per cent respectively in the fiscal year 2011-12.
Punjab, leading food grain producing state of India, Andhra Pradesh and Karnataka, both the heart of the IT sector of the country, and Uttar Pradesh, the country's most populous state, registered growth of 6.5% in 2011-12, lower than India's GDP growth.
With the Bihar government taking numerous measures to attract investment in the state, the result is quite visible with the growth number rising on constant basis. An improved law and order situation and developing infrastructure in the state are apparently boosting the investment sentiments of the industrial houses in the country which are now coming ahead with proposals to set up factory in the state. Agricultural productivity has also taken a quantum jump in the state apparently contributing to the overall growth of the state. A slew of development measures have also been put into place by the government to ensure enhanced education and medical facilities in the state.
The state was closely followed by Delhi and Puducherry. Chhattisgadh and Goa were the other two states in the list of top five states. Tamil Nadu and Gujarat, the two highly industrialized states registered the growth of 9.4 per cent and 9.1 per cent respectively in the fiscal year 2011-12.
Punjab, leading food grain producing state of India, Andhra Pradesh and Karnataka, both the heart of the IT sector of the country, and Uttar Pradesh, the country's most populous state, registered growth of 6.5% in 2011-12, lower than India's GDP growth.
With the Bihar government taking numerous measures to attract investment in the state, the result is quite visible with the growth number rising on constant basis. An improved law and order situation and developing infrastructure in the state are apparently boosting the investment sentiments of the industrial houses in the country which are now coming ahead with proposals to set up factory in the state. Agricultural productivity has also taken a quantum jump in the state apparently contributing to the overall growth of the state. A slew of development measures have also been put into place by the government to ensure enhanced education and medical facilities in the state.
India’s Forex Reserves plunged by 1.74 Billion Dollar to 290 billion dollar
According to the data released by the Reserve Bank of India (RBI) on 2
June 2012, India’s foreign exchange reserve plummeted by 1.74 billion
dollar to 290 billion dollar for the week ended 25 May 2012. The RBI
data displayed a sharp decline in the country’s forex reserves for the
fourth consecutive week. The forex reserves had dropped by 1.80 billion
dollar, 1.37 billion dollar and 2.18 billion dollar, respectively, in
the previous three weeks.
The drop in forex reserve is largely due to sale of dollar by the central bank to defend consistently falling rupee. The Indian rupee plunged to a record low in recent weeks and stood 55.54 against a dollar on 1 June 2012. The rupee fall for the nine consecutive weeks is the longest losing streak since the 2008 economic crisis. RBI had reportedly sold dollars to arrest the further fall of Indian rupee.
The value of gold reserves of the country for the week ended 25 May 2012 remained unmoved at 26.61 billion dollar.
The drop in forex reserve is largely due to sale of dollar by the central bank to defend consistently falling rupee. The Indian rupee plunged to a record low in recent weeks and stood 55.54 against a dollar on 1 June 2012. The rupee fall for the nine consecutive weeks is the longest losing streak since the 2008 economic crisis. RBI had reportedly sold dollars to arrest the further fall of Indian rupee.
The value of gold reserves of the country for the week ended 25 May 2012 remained unmoved at 26.61 billion dollar.
Friday, June 1, 2012
National Telecom Policy (NTP)-2012 was approved by union cabinet
The Union Cabinet approved the National Telecom Policy -2012 (NTP -
2012) and also approved introduction of Unified Licence and authorised
the Department of Telecommunications to finalise the new Unified
Licensing regime with the approval of Minister of Communications &
IT.
The salient features of the National Telecom Policy-2012 are as follows:
The policy envisions providing secure, reliable, affordable and high
quality converged telecommunication services anytime, anywhere for an
accelerated inclusive socio-economic development. The main thrust of the
Policy is on the multiplier effect and transformational impact of such
services on the overall economy.
The thrust areas of NTP - 2012 are
- Increase rural teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the year 2020
- Repositioning of Mobile phone- as an instrument of empowerment
- Broadband –“'Broadband For All” at a minimum download speed of 2 Mbps
- Domestic Manufacturing- Making India a global hub
- Convergence of Network, Services and Devices
- Liberalisation of Spectrum- any Service in any Technology
- Simplification of Licensing regime- Unified Licensing, delinking of Spectrum from License, Online real time submission and processing
- Consumer Focus - Achieve One Nation - Full Mobile Number Portability and work towards One Nation - Free National Roaming
- Resale of Services
- Voice over Internet Protocol
- Cloud Computing, Next Generation Network including IPV6
The policy seeks to provide a predictable and stable policy regime for a
period of about ten years. Policy will be operationalised by bringing
out detailed guidelines, as may be considered appropriate, from time to
time. Implementation will enable smooth implementation of the policies
for providing an efficient telecommunication infrastructure taking into
account the primary objective of maximizing public good by empowering
the people of India. The policy will further enable taking suitable
facilitatory measures to encourage existing service providers to rapidly
migrate to the new regime in a uniformly liberalised environment with a
level playing field.
Growth Rate of Eight Core Infrastructure Industries dipped to 2.2% in April 2012
As per the official data released on 31 May 2012, the growth rate of
eight core infrastructure industries dipped to 2.2 per cent in April
2012 from 4.2 per cent in April 2011. The eight core sectors — crude
oil, petroleum refinery products, coal, electricity, cement and finished
steel has a weight of 37.9 per cent in the Index of Industrial
Production (IIP). The dip in the growth of the core sector industries
was attributed to poor performance by sectors such as natural gas, crude
oil and fertilizers.
The overall infrastructure sector growth for March 2012 was revised downwards to 2.2 per cent as compared to a healthier 6.5 per cent expansion witnessed in the same month last year. Also, the cumulative growth of infrastructure industries was found to have slipped to 4.4 per cent, which is significantly lower than the 6.6 per cent increase seen in 2010-11.
As per the data released by the CSO, natural gas and crude oil output during April 2012 fell by 11.3 per cent and 1.3 per cent, respectively. Petroleum refinery products and fertiliser production also witnessed negative growth rates, contracting by 2.8 per cent and 9.3 per cent in April 2012. Slowdown in electricity generation was also witnessed in April. Electricity generation grew at a lower pace of 4.6 per cent during the month as compared to 6.4 per cent in April 2011.
However, three sectors- coal, steel and cement were noted to have fared better as compared to 2011. While coal production went up by 3.8 per cent in April 2012 as compared to an increase of 2.7 per cent witnessed in April 2011, the output of steel and cement grew by a healthy 5.8 per cent and 8.6 per cent during April 2012 as compared to negative growth rates of (-) 2.9 per cent and (-) 0.1 per cent witnessed by the two sectors in the corresponding period of 2011.
The overall infrastructure sector growth for March 2012 was revised downwards to 2.2 per cent as compared to a healthier 6.5 per cent expansion witnessed in the same month last year. Also, the cumulative growth of infrastructure industries was found to have slipped to 4.4 per cent, which is significantly lower than the 6.6 per cent increase seen in 2010-11.
As per the data released by the CSO, natural gas and crude oil output during April 2012 fell by 11.3 per cent and 1.3 per cent, respectively. Petroleum refinery products and fertiliser production also witnessed negative growth rates, contracting by 2.8 per cent and 9.3 per cent in April 2012. Slowdown in electricity generation was also witnessed in April. Electricity generation grew at a lower pace of 4.6 per cent during the month as compared to 6.4 per cent in April 2011.
However, three sectors- coal, steel and cement were noted to have fared better as compared to 2011. While coal production went up by 3.8 per cent in April 2012 as compared to an increase of 2.7 per cent witnessed in April 2011, the output of steel and cement grew by a healthy 5.8 per cent and 8.6 per cent during April 2012 as compared to negative growth rates of (-) 2.9 per cent and (-) 0.1 per cent witnessed by the two sectors in the corresponding period of 2011.
India's Exports registered a Growth of 3.2 Per Cent in April 2012
According to data released by the Commerce Ministry in New Delhi on 1
June 2012 India's exports registered a growth of 3.2 per cent on
year-on-year basis to 24.4 billion dollar in April 2012. Exports figure
in April 2011 stood at 23.6 billion dollar. The slumping export figures
are largely attributed to the slowing global demand of goods.
Imports during the same period witnessed a growth of 3.8 per cent to 37.9 billion dollar, creating a trade deficit of 13.4 billion dollar. In April 2012, the country's oil imports grew about 7 per cent to 13.9 billion dollar compared to the same period in 2011. Non-oil imports expanded 2 per cent on year-on-year basis to 24 billion dollar during April the first month of fiscal year 2012-13.
On an annual basis Indian exports expanded 21 per cent to 303.7 billion dollar in the fiscal year 2011-12. The imports during the same period grew 32.2 per cent to 488.6 billion dollar. The trade deficit for the full fiscal year was 184.9 billion dollar.
A higher trade deficit will have an adverse impact over already ailing Indian economy. The broadening trade deficit could worsen the current account balance of the country and further weaken the rupee.
Imports during the same period witnessed a growth of 3.8 per cent to 37.9 billion dollar, creating a trade deficit of 13.4 billion dollar. In April 2012, the country's oil imports grew about 7 per cent to 13.9 billion dollar compared to the same period in 2011. Non-oil imports expanded 2 per cent on year-on-year basis to 24 billion dollar during April the first month of fiscal year 2012-13.
On an annual basis Indian exports expanded 21 per cent to 303.7 billion dollar in the fiscal year 2011-12. The imports during the same period grew 32.2 per cent to 488.6 billion dollar. The trade deficit for the full fiscal year was 184.9 billion dollar.
A higher trade deficit will have an adverse impact over already ailing Indian economy. The broadening trade deficit could worsen the current account balance of the country and further weaken the rupee.
India’s Fiscal Deficit eased to 5.7 in the Fiscal Year 2011-12
According to the figures released by Controller General of Accounts
(CGA) on 31 May 2012, India’s fiscal deficit eased to 5.7 per cent of
GDP, lower than 5.9 per cent projected in the revised estimates in the
Budget.
Fiscal deficit, the difference between the government's total receipts and expenditure, capped at 5.09 trillion rupees in 2011-12. While the tax revenue receipts curbed to 6.31 trillion rupees against the projected figure of 6.42 trillion rupees, government’s expenditure both non-plan expenditure and plan expenditure also went down at 8.84 trillion rupees and 4.13 trillion rupees respectively. The revenue deficit was at 4.3% of GDP.
The government is working hard to curtail the broadening fiscal deficit and aiming to bring it down to 5.1 per cent in the fiscal year 2012-13. In order to meet its fiscal deficit target the finance ministry is eyeing to cut the subsidy bill to below 2 per cent of GDP in the fiscal year 2012-13and 1.75 per cent in the subsequent years. The slowing economy is making it difficult for the government to achieve its fiscal deficit target.
The gross domestic product (GDP) data released by the Central Statistical Organisation (CSO), had capped the GDP growth rate rate of India in 2011-12 at 6.5 per cent, as against the earlier estimate of 6.9 per cent.
Fiscal deficit, the difference between the government's total receipts and expenditure, capped at 5.09 trillion rupees in 2011-12. While the tax revenue receipts curbed to 6.31 trillion rupees against the projected figure of 6.42 trillion rupees, government’s expenditure both non-plan expenditure and plan expenditure also went down at 8.84 trillion rupees and 4.13 trillion rupees respectively. The revenue deficit was at 4.3% of GDP.
The government is working hard to curtail the broadening fiscal deficit and aiming to bring it down to 5.1 per cent in the fiscal year 2012-13. In order to meet its fiscal deficit target the finance ministry is eyeing to cut the subsidy bill to below 2 per cent of GDP in the fiscal year 2012-13and 1.75 per cent in the subsequent years. The slowing economy is making it difficult for the government to achieve its fiscal deficit target.
The gross domestic product (GDP) data released by the Central Statistical Organisation (CSO), had capped the GDP growth rate rate of India in 2011-12 at 6.5 per cent, as against the earlier estimate of 6.9 per cent.
Thursday, May 24, 2012
Government Announces New Expert Panel on Poverty Estimates
The
State-wise poverty lines and poverty ratio for 2009-10 have been computed
following the extant Tendulkar methodology. Based on the said methodology the Planning
Commission has released the estimates through a Press Note issued on 19th
March, 2012. As indicated in the Press
Note, the poverty ratio in the country has come down from 37.2% in 2004-05 to
29.8% in 2009-10. As a result, the
number of poor persons in the country has reduced from 40.7 crore
in 2004-05 to 35.5 crore in 2009-10.
The Tendulkar Committee, which submitted its Report in 2009,
has incorporated adequacy of expenditure from the normative and nutritional
viewpoint. It stated “while moving away
from the calorie norms, the proposed poverty lines have been validated by
checking the adequacy of actual private expenditure per capita near the poverty
lines on food, education and health by comparing them with normative
expenditures consistent with nutritional, educational and health outcomes”.
Taking
note of the various points of views and perspectives expressed in the public
domain with respect to the need to revisit poverty estimates and related
methodologies, Government has since decided to set up an Expert Technical Group
to revisit the methodology for estimation of the poverty and identification of
the poor.
The
Technical Group comprising of eminent economists under the Chairmanship of Dr.
C. Rangarajan, Chairman, Prime Minister’s Economy
Advisory Council, is as under:
1. Dr. C. Rangarajan,
Chairman, Prime Minister’s
Economy
Advisory Council … …. Chairman
2. Dr. Mahendra
Dev, Director, Indira
Gandhi
Institute of Development Research … … Member
3. Dr. K. Sundaram,
formerly Delhi School
of Economics … … Member
4. Dr. Mahesh Vyas,
Centre for
Monitoring
Indian Economy … … Member
5. Dr. K.L. Datta,
Ex-Adviser (Perspective Planning),
Planning
Commission … … Member
Convener
The Terms
of Reference of the Expert Technical Group have been finalized as under:
1. “To comprehensively review the existing
methodology of estimation of poverty and examine whether the poverty line
should be fixed solely in terms of a consumption basket or whether other
criteria are also relevant, and if so, whether the two can be effectively
combined to evolve a basis for estimation of poverty in rural and urban areas.
2. To examine the issue of divergence
between consumption estimates based on the NSSO methodology
and those emerging from the National Accounts aggregates; and to suggest a
methodology for updating consumption poverty lines using the new consumer price
indices launched by the CSO for rural and urban areas state-wise.
3. To review alternative methods of
estimation of poverty which may be in use in other countries, including their
procedural aspects; and indicate whether on this basis, a particular method can
be evolved for empirical estimation of poverty in India, including procedures
for updating it over time and across states;
4. To recommend how the estimates of
poverty, as evolved above, should be linked to eligibility and entitlements for
schemes and programmes under the Government of India”.
Wednesday, May 23, 2012
India Overtook Spain to become the 11th Largest Insurance Market in the World
According to the report compiled by Swiss Re named World Insurance in 2010,
and published on 6 July 2011, India overtook Spain to become the 11th
largest insurance market in the world. Indian insurance market jumped up
10 places in the last decade. India’s market share increased because of
the shrinkage in several European markets. USA is the largest insurance
market in the world according to the report.
Swiss Reinsurance Company Limited is generally known as Swiss Re. It is a Swiss reinsurance company. The Company is headquartered in Zurich. Swiss Re was founded in 1863.
Swiss Reinsurance Company Limited is generally known as Swiss Re. It is a Swiss reinsurance company. The Company is headquartered in Zurich. Swiss Re was founded in 1863.
India's GDP Growth to make the Indian Banking Industry Third Largest in the World by 2025
A study titled Being five star in productivity — road map for
excellence in Indian banking was released FICCI-IBA-BCG on 22 August
2011, the eve of IBA-FICCI annual banking conference. The theme for the
banking conference was decided to be Productivity Excellence.
According to the study, India's gross domestic product (GDP) growth will make the Indian banking industry third largest in the world by 2025. The report chalked out an action agenda for banks, based on insights from an extensive productivity benchmarking exercise conducted across 40 banks.
The report highlighted that banks have to strive for excellence on five dimensions: branch sales and service, new channels, lean operations, organisation design and bad debt management.
The report stated that branches of banks can generate higher levels of revenue for the banks. Indian banks deploy 62 per cent of staff in customer facing roles as against the benchmark of 82 per cent observed by BCG globally.
Break-out growth in usage of new channels will characterise the next decade in Indian banking. Among the new channels, mobile phones, propelled by 3G and smart phone technology, will emerge as an undisputed winner by 2020 accounting for 20-30 per cent of total transactions. ATMs have seen exponential growth in usage but are far from maturity with just about 50 per cent adoption even in metros. New channels will not only enhance the productivity but can be a source of new customer acquisition.
Indian banks, the report mentioned were to be doing well overall with industry cost-income ratio below 50 per cent.
However, there remained plenty of scope for betterment. On an average, Indian banks have about 20 per cent of staff deployed in back-office processing (for some banks, as high as 40 per cent) as against a global best of 10 per cent observed by BCG. Process re-engineering and operating model change if employed could help reduce costs, improve service, and contain operating risks.
Public sector banks were found to be under-investing in technology with spends at about 25 per cent of global benchmarks. An Indian banks average administrative overhead at about 11 per cent of the total staff is in line with what BCG has observed globally.
The banking industry was holding low headcount in HR and finance roles. Variable pay at 2 per cent of fixed compensation is far below the 12-15 per cent that is optimal for incentive compensation. The public sector as per the report urgently needed an adjustment in its compensation structure. The industry has an impressive bad debt performance and the bad debt levels in priority sectors of MSME and agriculture are significantly high.
The report suggested major overhaul of NPA management processes at banks. Some banks have alarmingly high NPA levels in relatively safe products such as home loans.
The report stressed on a whole new paradigm for risk management encompassing operating model, technology, experience and expertise retention, and minimum critical size of book.
According to the study, India's gross domestic product (GDP) growth will make the Indian banking industry third largest in the world by 2025. The report chalked out an action agenda for banks, based on insights from an extensive productivity benchmarking exercise conducted across 40 banks.
The report highlighted that banks have to strive for excellence on five dimensions: branch sales and service, new channels, lean operations, organisation design and bad debt management.
The report stated that branches of banks can generate higher levels of revenue for the banks. Indian banks deploy 62 per cent of staff in customer facing roles as against the benchmark of 82 per cent observed by BCG globally.
Break-out growth in usage of new channels will characterise the next decade in Indian banking. Among the new channels, mobile phones, propelled by 3G and smart phone technology, will emerge as an undisputed winner by 2020 accounting for 20-30 per cent of total transactions. ATMs have seen exponential growth in usage but are far from maturity with just about 50 per cent adoption even in metros. New channels will not only enhance the productivity but can be a source of new customer acquisition.
Indian banks, the report mentioned were to be doing well overall with industry cost-income ratio below 50 per cent.
However, there remained plenty of scope for betterment. On an average, Indian banks have about 20 per cent of staff deployed in back-office processing (for some banks, as high as 40 per cent) as against a global best of 10 per cent observed by BCG. Process re-engineering and operating model change if employed could help reduce costs, improve service, and contain operating risks.
Public sector banks were found to be under-investing in technology with spends at about 25 per cent of global benchmarks. An Indian banks average administrative overhead at about 11 per cent of the total staff is in line with what BCG has observed globally.
The banking industry was holding low headcount in HR and finance roles. Variable pay at 2 per cent of fixed compensation is far below the 12-15 per cent that is optimal for incentive compensation. The public sector as per the report urgently needed an adjustment in its compensation structure. The industry has an impressive bad debt performance and the bad debt levels in priority sectors of MSME and agriculture are significantly high.
The report suggested major overhaul of NPA management processes at banks. Some banks have alarmingly high NPA levels in relatively safe products such as home loans.
The report stressed on a whole new paradigm for risk management encompassing operating model, technology, experience and expertise retention, and minimum critical size of book.
Monday, May 21, 2012
Saturday, May 19, 2012
Union Cabinet approved 7.6 Billion Dollar TAPI Gas Pipeline Project
The Union Cabinet approved the 7.6 billion dollar TAPI gas pipeline project on
17 May 2012. The TAPI gas pipeline project which originates from the
central Asian nation Turkmenistan and reaches to India via Afghanistan
and Pakistan is also referred to as the “peace pipeline” as some of the
countries that it passes through don’t enjoy good relationship with each
other.
The TAPI gas project will have a total length of 1680 km. Of the total length 144km will be in Turkmenistan, 735km in Afghanistan, and 800km in Pakistan, bringing it to the India border. The pipeline, will be entirely functional in 2018 and supply gas over the next thirty years.
The pipeline would produce 90 million standard cubic metres of gas per day (mscmd). Of the total gas pumped through it, India and Pakistan will get 38 mscmd each and Afghanistan the remaining 14 mscmd. At present India requires 176 mscmd of gas, of which a little more than one-sixth is imported. The country’s need of the gas might reach the level of about 400 mscmd by 2020.
The Indian government was pursuing a similar project with the Iran which was put on hold by the Indian government given the pressure from the USA. The TAPI gas project also involves Asian Development Bank which has bestowed financial assistance to the project.
The TAPI pipeline, was proposed in the early 1990s, but was delayed due to the political and economic hurdles involved into the project. Security of the pipeline has been the major issue of concern which passes through some of the most unstabled regions of Afghanistan and Pakistan, where the project may face the risk of sabotage. India joined the project in April 2008.
The TAPI gas project will have a total length of 1680 km. Of the total length 144km will be in Turkmenistan, 735km in Afghanistan, and 800km in Pakistan, bringing it to the India border. The pipeline, will be entirely functional in 2018 and supply gas over the next thirty years.
The pipeline would produce 90 million standard cubic metres of gas per day (mscmd). Of the total gas pumped through it, India and Pakistan will get 38 mscmd each and Afghanistan the remaining 14 mscmd. At present India requires 176 mscmd of gas, of which a little more than one-sixth is imported. The country’s need of the gas might reach the level of about 400 mscmd by 2020.
The Indian government was pursuing a similar project with the Iran which was put on hold by the Indian government given the pressure from the USA. The TAPI gas project also involves Asian Development Bank which has bestowed financial assistance to the project.
The TAPI pipeline, was proposed in the early 1990s, but was delayed due to the political and economic hurdles involved into the project. Security of the pipeline has been the major issue of concern which passes through some of the most unstabled regions of Afghanistan and Pakistan, where the project may face the risk of sabotage. India joined the project in April 2008.
Tuesday, May 15, 2012
Insurance Penetration in the Country
The Insurance Regulatory and Development Authority
(IRDA) has informed that the total insurance penetration, which is the
ratio of insurance premium as a percentage of GDP has increased from
2.32 in 2000-01 to 5.10 in 2010-11. The life insurance penetration
has decreased from 4.60 in 2009-10 to 4.40 in 2010-11, whereas the
non-life insurance penetration has increased from 0.60 in 2009-10 to
0.71 in 2010-11.
The insurance penetration is impacted by several macro-economic factors such as growth, inflation, interest rates, small savings return and returns of competing financial products offered by banks and mutual funds.
The IRDA undertakes a sustained insurance education campaign under the brand name Bima Bemisaal. The campaign seeks to educate the uninsured and the insured about the need for insurance, rights, obligations of policyholders etc through various media channels viz. print, radio and television. IRDA also supports consumer bodies in conducting seminars and workshops on insurance in various parts of the country in order to create awareness about insurance. The Bima Bemisaal campaign is carried out in various Indian languages including Hindi, apart from English. IRDA has also brought out educational material for the public and policyholders. Further, to create awareness, IRDA over the last two years has started conducting yearly seminars exclusively on policyholder protection and welfare that brings together all stakeholders including consumer representatives.
The insurance penetration is impacted by several macro-economic factors such as growth, inflation, interest rates, small savings return and returns of competing financial products offered by banks and mutual funds.
The IRDA undertakes a sustained insurance education campaign under the brand name Bima Bemisaal. The campaign seeks to educate the uninsured and the insured about the need for insurance, rights, obligations of policyholders etc through various media channels viz. print, radio and television. IRDA also supports consumer bodies in conducting seminars and workshops on insurance in various parts of the country in order to create awareness about insurance. The Bima Bemisaal campaign is carried out in various Indian languages including Hindi, apart from English. IRDA has also brought out educational material for the public and policyholders. Further, to create awareness, IRDA over the last two years has started conducting yearly seminars exclusively on policyholder protection and welfare that brings together all stakeholders including consumer representatives.
Concern of Credit Rating Agencies on Indian Economy
India’s sovereign debt is usually rated by six major
Sovereign Credit Rating Agencies (SCRAs) viz. Moody’s Investor Services,
Standard and Poor’s (S&P), Dominion Bond Rating Service (DBRS),
Fitch Ratings, Japanese Credit Rating Agency (JCRA) and Rating and
Investment Information (R&I).
The assessment and ratings given by the various agencies differ from each other. In past two years, India’s credit ratings were either affirmed or upgraded by the above mentioned SCRAs. India received these assessments when many nations, including some of the strongest economies, were downgraded during the period.
In June 2011, DBRS upgraded the outlook on India’s rating and also appreciated the Government’s efforts towards fiscal consolidation. In their July 2011 report, Fitch affirmed the credit rating issued in the previous year and also appreciated the management of the economy stating that “India’s medium-term economic growth prospects remain strong, as potential GDP growth remains greater that 8%, well above the ‘BBB – ‘ range median’. In December 2011, Moody’s upgraded the rating on India’s sovereign debt in four segments. S&P, in its latest rating of India’s sovereign credit rating on 25th April 2012, affirmed its BBB (-) long term and A-3 short term sovereign rating of India.
However, all the SCRAs have note favourably commented on India’s fiscal deficit and debt. In their April 2012 report, S&P had revised the outlook on the long-term rating on India from Stable to negative. In its report, S&P also stated that the outlook has been revised “to reflect at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow”.
Government has taken not of the concerns expressed by various SCRAs and is taking necessary steps in this regard.
In particular, Government has taken note of S&P’s report released on 25th April, 2012. In this regard, Government is taking a number of measures with a view to reducing the current account deficit, improving growth prospects of the economy, and reducing the fiscal deficit.
The measures being taken include steps to restrict the expenditure on central subsidies to under 2% of GDP in 2012-13 and to further bring it down to 1.75% of GDP in the next three years. In addition, Government has made a determined attempt to come back to the path of fiscal consolidation by reducing the budgeted fiscal deficit to 5.1% of GDP in BE 2012-13 from 5.9% of GDP in RE 2011-12.
The assessment and ratings given by the various agencies differ from each other. In past two years, India’s credit ratings were either affirmed or upgraded by the above mentioned SCRAs. India received these assessments when many nations, including some of the strongest economies, were downgraded during the period.
In June 2011, DBRS upgraded the outlook on India’s rating and also appreciated the Government’s efforts towards fiscal consolidation. In their July 2011 report, Fitch affirmed the credit rating issued in the previous year and also appreciated the management of the economy stating that “India’s medium-term economic growth prospects remain strong, as potential GDP growth remains greater that 8%, well above the ‘BBB – ‘ range median’. In December 2011, Moody’s upgraded the rating on India’s sovereign debt in four segments. S&P, in its latest rating of India’s sovereign credit rating on 25th April 2012, affirmed its BBB (-) long term and A-3 short term sovereign rating of India.
However, all the SCRAs have note favourably commented on India’s fiscal deficit and debt. In their April 2012 report, S&P had revised the outlook on the long-term rating on India from Stable to negative. In its report, S&P also stated that the outlook has been revised “to reflect at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow”.
Government has taken not of the concerns expressed by various SCRAs and is taking necessary steps in this regard.
In particular, Government has taken note of S&P’s report released on 25th April, 2012. In this regard, Government is taking a number of measures with a view to reducing the current account deficit, improving growth prospects of the economy, and reducing the fiscal deficit.
The measures being taken include steps to restrict the expenditure on central subsidies to under 2% of GDP in 2012-13 and to further bring it down to 1.75% of GDP in the next three years. In addition, Government has made a determined attempt to come back to the path of fiscal consolidation by reducing the budgeted fiscal deficit to 5.1% of GDP in BE 2012-13 from 5.9% of GDP in RE 2011-12.
Reforms in PDS
Targeted Public Distribution System (TPDS) is
operated under the joint responsibility of Central Government and
State/Union Territory (UT) Governments. The Central Government is
responsible for procurement, allocation and transportation of foodgrains
upto the designated depots of Food Corporation of India. The
operational responsibilities for lifting and distributing the allocated
foodgrains within the States/UTs, identification of eligible Below
Poverty Line (BPL) families, issuance of ration cards to them and
supervision over distribution of allocated foodgrains to eligible card
holders through the Fair Price Shops (FPSs) are of the State/UT
Governments.
Suggestions are received from time to time to improve the functioning of TPDS. 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 Antyodaya Anna Yojana (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 Computerisation of TPDS operations at various levels.
Government issues instructions and advisories to States/UTs for reforms in TPDS. This Department has also been regularly interacting with the States for successful and effective reforms of the TPDS. In the conference of State Food Secretaries & other officials on Best Practices and Reforms in TPDS held in July, 2010, measures being taken by States/UTs for streamlining the TPDS were shared amongst the participants. These, inter-alia, related to proper identification of beneficiaries, timely distribution of foodgrains, door step delivery of foodgrains, enhancing viability of Fair Price Shops (FPSs), enhancing storage capacities, use of technology based initiatives in TPDS, increasing public awareness, monitoring distribution of PDS commodities through social audit, etc. Regional Conferences were also held in February, 2011 with State/UT Food Ministers and Food Secretaries to review the implementation of TPDS. Further, a two day Conference on Targeted Public Distribution System and Storage with Food & Agriculture Ministers and Secretaries of States/UTs was held on 8th and 9th February, 2012 at New Delhi. The issues discussed in the Conference included stepping up of procurement activities, expeditious action to be taken for computerization of PDS and creation of storage capacity as well as time bound completion of existing projects.
National Food Security Bill has been introduced in Lok Sabha on 22.12.2011. Under the Bill, upto 75% of the rural population (with at least 46% belonging to priority households) and upto 50% of urban population (with at least 28% belonging to priority households) are proposed to be covered under TPDS. Priority households will be entitled to receive 7 kg of foodgrains per person per month at prices not exceeding Rs.3/2/1 per kg for rice/wheat/coarsegrains. General households will be entitled to receive not less than 3 kg of foodgrains per person per month at prices not exceeding 50% of Minimum Support Price (MSP) for wheat and coarsegrains and not exceeding 50% of derived MSP for rice. In order to enable Central and State Governments to perform the roles envisaged under the proposed legislation, provision for reforms in TPDS has also been made in the Bill.
Suggestions are received from time to time to improve the functioning of TPDS. 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 Antyodaya Anna Yojana (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 Computerisation of TPDS operations at various levels.
Government issues instructions and advisories to States/UTs for reforms in TPDS. This Department has also been regularly interacting with the States for successful and effective reforms of the TPDS. In the conference of State Food Secretaries & other officials on Best Practices and Reforms in TPDS held in July, 2010, measures being taken by States/UTs for streamlining the TPDS were shared amongst the participants. These, inter-alia, related to proper identification of beneficiaries, timely distribution of foodgrains, door step delivery of foodgrains, enhancing viability of Fair Price Shops (FPSs), enhancing storage capacities, use of technology based initiatives in TPDS, increasing public awareness, monitoring distribution of PDS commodities through social audit, etc. Regional Conferences were also held in February, 2011 with State/UT Food Ministers and Food Secretaries to review the implementation of TPDS. Further, a two day Conference on Targeted Public Distribution System and Storage with Food & Agriculture Ministers and Secretaries of States/UTs was held on 8th and 9th February, 2012 at New Delhi. The issues discussed in the Conference included stepping up of procurement activities, expeditious action to be taken for computerization of PDS and creation of storage capacity as well as time bound completion of existing projects.
National Food Security Bill has been introduced in Lok Sabha on 22.12.2011. Under the Bill, upto 75% of the rural population (with at least 46% belonging to priority households) and upto 50% of urban population (with at least 28% belonging to priority households) are proposed to be covered under TPDS. Priority households will be entitled to receive 7 kg of foodgrains per person per month at prices not exceeding Rs.3/2/1 per kg for rice/wheat/coarsegrains. General households will be entitled to receive not less than 3 kg of foodgrains per person per month at prices not exceeding 50% of Minimum Support Price (MSP) for wheat and coarsegrains and not exceeding 50% of derived MSP for rice. In order to enable Central and State Governments to perform the roles envisaged under the proposed legislation, provision for reforms in TPDS has also been made in the Bill.
Saturday, May 12, 2012
Rupay System
National Payment Corporation of India (NPCI) is an
authorized entity under Payment and Settlement Systems Act, 2007. The
Reserve Bank of India has granted approval of the NPCI for the
following:
1) Public launch of RUPAY affiliated cards issued by banks (for use at ATMs and micro-ATMs).
2) Pilot launch of RUPAY affiliated Debit Card (issued by banks).
It is an approve card payment network like Mastercard and VISA.
As a further step towards Financial Inclusion, the Issue of RUPAY affiliated cards by banks will enable cashless transaction where such cards are used at Point of Sale (POS) and Micro ATMs.
1) Public launch of RUPAY affiliated cards issued by banks (for use at ATMs and micro-ATMs).
2) Pilot launch of RUPAY affiliated Debit Card (issued by banks).
It is an approve card payment network like Mastercard and VISA.
As a further step towards Financial Inclusion, the Issue of RUPAY affiliated cards by banks will enable cashless transaction where such cards are used at Point of Sale (POS) and Micro ATMs.
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