Budget 2018: More Sleight of Hand

Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.

Mohan Guruswamy


The Union Budget 2018 was presented at a time when the Indian economy is facing the worst slowdown in at least half a decade (CSO). While macroeconomic shocks such as demonetization and the implementation of the goods and services tax (GST) are likely to have contributed to the slowdown, the root of the slowdown lies in the decline of investments in the country. The slowdown in investments has led to all round and widespread gloom and distress. The big question about this budget then was to see how it addresses issues arising out of this such a job contraction in the informal sector, a slowdown of manufacturing, increasing farmer, and lower-middle-class distress? 

In a budget, you take from some and give to others. So who gives and who takes is where we should be looking. The challenge of budget making is to take enough from the nearly 15% of the population or about 200 million making up 40 million families liable for direct taxes, without dissatisfying them too much. This should provide enough to blunt the edge of popular anger of the 60% who make little more than subsistence in terms of income. This covers about 700-750 million population or 150 families. It is these people have largely been bypassed by the huge growth gains made since 1998. That means the two NDA and two UPA terms.

Added to this the government has to promise to deliver all this with a most expensive public administration (10.4% of GDP), and an almost defunct delivery system. A majority of government employees – over 25 million – are the bedrock of the direct taxes paying cohort. So in effect, a major part of the direct taxes are realized by the government from those who work in it. In either case, we the people pay for them.

So you need to get much from others. This is where indirect taxes come in. Indirect taxes are derived from a far bigger base of population. For instance, even the lowest sections will buy match-boxes from which taxes are derived. As you go up the chain of manufactured goods the incidence of indirect taxes increase. This is where you run up against powerful lobbies. For instance, the polyester yarn manufacturers will look at askance at too many reliefs and benefits given to the cotton textiles sector. Balancing the budget is the easier part. Balancing aspirations is next to impossible.

FinanceMinister Arun Jaitley (image from his FB page)


Thus, budgets haven’t really changed over the decades. An analysis of budget break-ups since 1999 shows that proportions of most heads just do not change, as GDP growth and hence tax revenues usually stay nearer where they have been before. Discretionary revenue expenditure can only go up when GDP growth really perks up as we saw between 2009-2012. From then it has been downhill in terms of growth.

Against this backdrop how are Modi and Jaitely faring? I must say quite heroically. Like boys on the burning deck. They are just distracting us with promises and hoping to stave off the inevitable – popular discontent. Take for instance the much-hyped National Health Protection scheme to cover 500 million people or 100 million families with the medical cover of up to Rs.5 lakhs. But what is the outlay for this? It is a measly Rs.30, 000 crores translating into a premium of about Rs.3000 per beneficiary family, whereas the prevailing premiums are at about Rs.4400 a year. Even here the government is being disingenuous. If this were in addition to what is allocated to the Rs.1.38 lakh crores to health, which was Rs.1.22 lakh crores in the previous year, there would be some little cause to cheer. No, instead it comes from the health budget, which in effect means that this year less money is being spent on public healthcare. So if government hospitals and clinics have fewer doctors and lesser medicines be happy with your health insurance and go to a private nursing home or corporate hospital and see how soon the cover evaporates. In effect, this is a direct benefit to private healthcare providers and insurance companies who will get a Rs.30,000 crores windfall.

A similar sleight of hand is indulged in increasing the standard deduction to Rs.40, 000 for salaried persons. The outlay for this is Rs.8000 crores. But the education cess goes up by 1%, which means an outgo of Rs.11, 000 crores. So who is out of pocket by Rs.3000 crores?

The government has announced that it will fund 8 crores new stove and cylinder on getting a gas connection. This is an existing scheme. But reports from gas agency dealers in several parts of the country, especially those in rural areas, have reported that an extremely low number of Ujjawala beneficiaries are returning for refills of their cylinders. Thus, the number of LPG connections may be rising rapidly, but LPG usage is not. The catch is that below poverty line families who exist on less than Rs 32 a day in rural areas and Rs 47 a day in urban areas is simply too poor afford the market rate of LPG.

There was much expectation of an agriculture-oriented budget. Nothing of that sort has been announced to suggest that. Institutional credit to the agriculture sector has gone up to Rs.11 lakh crores when it was Rs.10 lakh crores last year.

The Finance Minister spoke about “revitalizing Infrastructure and Systems in Education by 2022. Technology to be the biggest driver in improving quality of education. To increase digital intensity in education, it will move an infrastructure from the blackboard to digital board. By 2022, every block with more than 50 percent ST population will have Eklavya schools at par with Navodaya Vidyalayas”. Fine, but show me the money? He is clearly a man for the big picture who doesn’t get into such specifics.

Am I unhappy about the budget? Why should I be? The limit for senior citizens for investment in interest-bearing LIC schemes doubled to from Rs.7.5 lakhs Rs 15 lakhs.  But as Claude Pepper said: “ at my age, I don’t even buy green bananas!”


जग दर्शन का मेला

प्रकाश के रे bargad.org के संपादक हैं.

डिजिटल तकनीक से हमारे जीवन के हर पहलू में लगातार बदलाव हो रहे हैं. इसके बिना आधुनिक जीवन-शैली की कल्पना कर पाना मुमकिन नहीं है. हमारे हाथ या जेब में जो स्मार्ट फोन है, वह हमारा बटुआ भी है, संपर्क का जरिया भी और मनोरंजन का उपकरण भी. इसी कड़ी में नया दखल है वैसे डिजिटल प्लेटफॉर्म का, जो सीधे हमारे मोबाइल में फिल्मों, सीरियलों और अन्य विजुअल कार्यक्रमों का प्रसारण कर रहे हैं. इन्हें ‘ओवर द टॉप’ यानी ओटीटी प्लेटफॉर्म कहा जाता है. कुछ समय पहले तक इंटरनेट के जरिये यूट्यूब जैसे गिनी-चुनी जगहों पर हम ऑडियो-विजुअल कंटेंट का मजा उठा सकते थे. लेकिन आज भारत में करीब 25 ऐसे प्लेटफॉर्म हैं जो क्रिकेट मैच से लेकर फिल्में और धारावाहिक दिखा रहे हैं. इनमें से अधिकांश ऐसे कार्यक्रम हैं जो सिर्फ इन्हीं प्लेटफॉर्म पर मौजूद हैं. एप्प के द्वारा मोबाइल फोन में मनोरंजन परोसनेवाली प्रमुख सेवाओं में नेटफ्लिक्स, हॉट स्टार, आमेजन प्राइम, जिओ प्ले, वूट, सोनी लिव, डिट्टो टीवी, इरोस नाउ, सन एनएक्सटी, ओजी टीवी, एप्पल टीवी आदि शामिल हैं. ये कंपनियां उपभिक्ताओं से निर्धारित मासिक या सालाना शुल्क लेकर सेवाएं देती हैं. यह शुल्क दो सौ से दो हजार रुपये के बीच हैं. अलीबाबा भी कुछ महीनों में अपना ओटीटी चैनल ला रहा है.  

ott-2भारत के डिजिटल बाजार की बढ़त की अपार संभावनाएं हैं और ओटीटी सेवाप्रदाता इसे बखूबी समझते हैं. यही कारण है कि वे इसमें लगातार निवेश कर रहे हैं. आम तौर पर टीवी धारावाहिक के एक एपिसोड पर 20 लाख के करीब खर्च आता है, पर ये कंपनियां अपने धारावाहिकों के एक एपिसोड पर करोड़-दो करोड़ खर्च करने को तैयार हैं. नेटफ्लिक्स ने मौलिक और लाइसेंसशुदा कार्यक्रमों के लिए ही छह अरब डॉलर का वैश्विक बजट तैयार किया है. कुछ रिपोर्टों के अनुसार इस कंपनी ने 20 अरब डॉलर का कर्ज लिया है ताकि भारत जैसे नये बाजारों में मजबूत मौजूदगी दर्ज करायी जा सके. आमेजन ने भारतीय बाजार के लिए दो हजार करोड़ का बजट बनाया है. हॉट स्टार का स्वामित्व रखनेवाली कंपनी स्टार इंडिया ने डिजिटल कंटेंट के लिए 12 सौ करोड़ से अधिक का निवेश करने की योजना बनायी है. आक्रामकता का अनुमान इसी बात से लगाया जा सकता है कि आइपीएल क्रिकेट मैचों के टीवी और डिजिटल प्रसारण के लिए स्टार इंडिया ने ढाई अरब डॉलर से अधिक का करार किया है.

फिल्मों और अन्य तरह के मनोरंजक कार्यक्रमों की खरीद के साथ ओटीटी प्लेटफॉर्म अपने लिए अलग से कार्यक्रम भी तैयार करा रहे हैं और फिल्म निर्माताओं एवं स्टूडियो से करार भी कर रहे हैं. चूंकि अभी भी इंटरनेट का बाजार भारत में मुख्य रूप से प्री-पेड है और सब्सक्राइबर संख्या में बढ़ोतरी के बावजूद ओटीटी कंपनियां मोबाइल सर्विस देनेवाली कंपनियों के साथ भी करार कर रही हैं ताकि उनके कंटेंट उपभोक्ताओं तक पहुंच सकें. ऐसा करते हुए मोबाइल कंपनियां भी अपने ओटीटी प्लेटफॉर्म को भी मजबूत बना रही हैं.

उपलब्ध आंकड़ों को देखें, तो बड़ी दिलचस्प तस्वीर उभरती है. अगस्त, 2016 से अगस्त, 2017 के बीच 16 ओटीटी सेवा प्रदाताओं के उपभोक्ताओं में 160 फीसदी से ज्यादा की बढ़ोतरी हुई थी. अब इसकी तुलना डीटीएच के आंकड़ों से करें. साल 2017 के अप्रैल और जून के बीच डीटीएच में वृद्धि महज 7.9 फीसदी रही थी, जबकि इसी अवधि में 2016 में यह दर 52 फीसदी थी. इससे साफ संकेत मिलता है कि डीटीएच की मांग कम हो रही है. टेलीविजन तकनीक में विकास इसका एक कारण हो सकता है. स्मार्ट टीवी को सीधे इंटरनेट से जोड़ा जा सकता है और नये टीवी मॉडलों को नेटकास्ट उपकरणों के जरिये इंटरनेट से जोड़ा जा सकता है. मतलब यह कि ओटीटी प्लेटफॉर्म की फिल्मों या कार्यक्रमों को हम मोबाइल फोन के साथ टीवी पर भी देख सकते हैं. इस लिहाज से ओटीटी का प्रसार डीटीएच बाजार के लिए नुकसानदेह साबित हो सकता है. जब आप नेट से समाचार, सूचनाएं और मनोरंजन पा सकते हैं, तो फिर छत पर डीटीएच की छतरी का क्या मतलब!ott-1

आकलन बताते हैं कि 2016 में ओटीटी बाजार 20.20 करोड़ डॉलर का था, जो 2017 में 27.20 करोड़ डॉलर का हो सकता है. कुछ दिनों में आंकड़े आने पर स्थिति साफ हो जायेगी. ओटीटी बाजार के बढ़त की संभावनाएं मोबाइल और नेट के प्रसार से जुड़ी हुई हैं. फिलहाल देश में 25 करोड़ स्मार्ट फोन हैं और 2020 तक इनकी संख्या 60 करोड़ तक पहुंच सकती है जिनमें से 85 फीसदी 4जी कनेक्शन के होंगे. डेटा उपभोग का मौजूदा हिसाब औसतन 8-9 जीबी प्रति माह हो गया है. मोबाइल बाजार की गलाकाट प्रतिस्पर्द्धा के चलते इंटरनेट डेटा की कीमतें सस्ती भी हो रही हैं और उनकी गति में भी लगातार बेहतरी हो रही है. यह भी दिलचस्प है कि मोबाइल डेटा का जो ट्रैफिक है, उसका 60 फीसदी हिस्सा वीडियो कंटेंट का है. माना जा रहा है कि 2016 से 2021 के बीच इसमें 63 फीसदी की वृद्धि होगी. जून, 2016 से जनवरी 2017 के बीच आंकड़े इंगित करते हैं कि इस दौरान सोशल मीडिया पर समय बिताने में 40 फीसदी की बढ़ोतरी हुई, जबकि इसी अवधि में वीडियो एप्प पर समय बिताने में 135 फीसदी की वृद्धि हुई.

इसमें कोई दो राय नहीं है कि ओटीटी का विस्तार तेजी से हो रहा है, पर आनेवाले समय में बाजार में कितनी कंपनियां बचेंगी, यह कहना मुश्किल है. बहुत अधिक निवेश और लगातार कंटेंट बनाने की होड़ उन कंपनियों के लिए फांस बन सकती है जिनके उपभोक्ता कम होंगे या उनमें लगातार निवेश की क्षमता कम होगी. यह हाल हम टेलीकॉम सेक्टर में देख चुके हैं. यह भी देखने की बात होगी कि सेंसरशिप न होने और मनोरंजन के फॉर्मुलों के कम दबाव का लाभ उठा कर ओटीटी प्लेटफॉर्म बेहतर मनोरंजन दे पाते हैं या नहीं.   


The Demand for Gondwana: India’s Adivasi Homeland

Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.

Mohan Guruswamy

The scion of the former Gond kings of Chandagarh or Chandrapur now in Maharashtra, Birshah Atram was recently visiting the Gond homelands in the former composite Adilabad district to meet his kinsmen in the various garhi’s in the region. Birshah Atram is descended from a line that was established in Chandrapur in the 13th century by Kandakya Balal Sah. The Gond kings ruled till 1751 when the British annexed it after the Raja of Nagpur died childless. Birshah who holds two PhD’s in English and Ancient Indian History has for long been seeking a solution to the vexed Adivasi problem, that has also morphed into the Telugu led Naxalite rebellion that enables the Central and State governments to turn it into a law and order issue, by highlighting the grievances of the Adivasi people.

He believes that the Central Government needs to implement the constitutional provisions and promises made in the Constituent Assembly by recognizing Gondi language and self-rule for the Gond people by carving out a Gondwana state of the Gond homelands in Maharashtra, Madhya Pradesh, Andhra Pradesh and Chhattisgarh.

Women in a tribal (Gond adivasi) village, Umaria district, India. Picture taken during a meeting organised by Ekta Parishad about land rights, the main grievance of the Adivasi people. © Yann Forget / Wikimedia Commons

There is a vast and mostly forested region spanning almost the entire midriff of India from Orissa to Gujarat, lying between the westbound Narmada and eastbound Godavari, bounded by many mountain ranges like the Vindhya, Satpura, Mahadeo, Meykul, and Abujhmar, that was once the main home of the Adivasi.

The late Professor Nihar Ranjan Ray, one of our most distinguished historians, described the central Indian Adivasis as “the original autochthonous people of India” meaning that their presence in India pre-dated by far the Dravidians, the Aryans and whoever else settled in this country. The anthropologist Dr. Verrier Elwin states this more emphatically when he wrote: “These are the real swadeshi products of India, in whose presence all others are foreign. These are ancient people with moral rights and claims thousands of years old. They were here first and should come first in our regard.”

Unfortunately like indigenous people all over the world, the India’s Adivasis too have been savaged and ravaged by later people claiming to be more “civilized”. They still account for almost 8% of India’s population and are easily it’s most deprived and oppressed section. Though this is the home of many tribal groups, the largest tribal group, the Gonds, dominated the region. The earliest Gond kingdom appears to date from the 10th century and the Gond Rajas were able to maintain a relatively independent existence until the 18th century, although they were compelled to offer nominal allegiance to the Mughal Empire.

The great historian Sir Jadunath Sarkar records: “In the sixteenth and seventeenth century much of the modern Central Provinces (today’s MP) were under the sway of aboriginal Gond chiefs and was known under the name of Gondwana. A Mughal invasion and the sack of the capital had crippled the great Gond kingdom of Garh-Mandla in Akbar’s reign and later by Bundela encroachments from the north.

But in the middle of the seventeenth century another Gond kingdom with its capital at Deogarh, rose to greatness, and extended its sway over the districts of Betul, Chindwara, and Nagpur, and portions of Seoni, Bhandara and Balaghat. In the southern part of Gondwana stood the town of Chanda, the seat of the third Gond dynasty and hereditary foe and rival of the Raja of Deogarh.” But the glory of Deogarh departed when the Maratha ruler of Nagpur annexed Deogarh after the death of Chand Sultan.

Incidentally, the Gond ruler of Deogarh, Bakht Buland, founded the city of Nagpur. Jadunath Sarkar writes about him thus: “He lived to extend the area, power and prosperity of his kingdom very largely and to give the greatest trouble to Aurangzeb in the last years of his reign.” In fact the one big reason Aurangzeb could not deploy all his power against Shivaji was because the Gond kings were constantly at war with the Mughals and kept interdicting the lines from the Deccan to Agra. But of course the history of modern India is not generous to them.

During the British days this region constituted much of the Central Provinces of India later to become Madhya Pradesh. This is the main home of about sixteen million Gond people who are India’s largest single tribal grouping. The Gonds are now a culturally and linguistically heterogeneous people having attained much cultural uniformity with the dominant linguistic influences of their region. Thus, the Gonds of the eastern and northwestern Madhya Pradesh region that now includes the new state of Chhattisgarh speak Chhattisgarhi and western Hindi.

But the Gonds of Bastar, which is at the southeastern end of this vast region and a part of Chhattisgarh, are different in this respect. Though there are many tribal groups like the Halbas, Bhatras, Parjas and Dorlas, the Maria and Bison Horned Gonds are the most numerous. The language spoken by them, like that of the Koyas of AP is an intermediate Dravidian language closer to Telugu and Kannada.

The process of Hinduization combined with Hindi culture has reduced the egalitarian Koitur to the bottom of the social strata. Dr. Kalyan Kumar Chakravarthy, Director of the Indira Gandhi Rashtriya Manav Sangrahalaya, Bhopal has written eloquently and cogently on this in his concluding chapter “Extinction or Adaptation of the Gonds” in the book “Tribal Identity in India” also edited by him.

The real enemy of the Adivasi is the creeping Hinduization with all its attendant values and exclusionary practices, seems to me a good start to the process of saving its tribal society from extinction. All over the rest of India’s central highlands our policies by forcing the Adivasis to merge their identities with that of the encroaching culture have crushed them into a becoming a feeble and self-pitying underclass.

Clearly there are two distinct reasons for the present unrest in the Adivasi homelands of India. The first and probably the more important one is the struggle for identity against the creeping Hinduization or de-culturization of Adivasi society. Adivasi society was built on a foundation of equality. People were given respect and status according to their contribution to social needs but only while they were performing that particular function.

Such a value-system was sustainable as long as the Adivasi community was non-acquisitive and all the products of society were shared. Adivasi society has been under constant pressure as the money economy grew and made traditional forms of barter less difficult to sustain.

The Fifth and Sixth Schedules under Article 244 of the Indian Constitution in 1950 provided for self-governance in specified tribal majority areas. In 1999 the Government of India even issued a draft National Policy on Tribals to address the developmental needs of tribal people. Special emphasis was laid on education, forestry, healthcare, languages, resettlement and land rights.

The draft was meant to be circulated between MP’s, MLA’s and Civil Society groups. A Cabinet Committee on Tribal Affairs was meant to constantly review the policy. Little has happened since. The draft policy is still a draft, which means there is no policy.

Even before Independence on December 16 1946, welcoming the Objectives Resolution in the Constituent Assembly, the legendary Adivasi leader Jaipal Singh stated the tribal case and apprehensions explicitly. He said: “Sir, if there is any group of Indian people that has been shabbily treated it is my people. They have been disgracefully treated, neglected for the last 6,000 years. …The whole history of my people is one of continuous exploitation and dispossession by the non-aboriginals of India punctuated by rebellions and disorder, and yet I take Pandit Jawahar Lal Nehru at his word. I take you all at your word that now we are going to start a new chapter, a new chapter of independent India where there is equality of opportunity, where no one would be neglected.” 

The Adivasi’s paid dearly for taking Jawaharlal Nehru and the Constituent Assembly at their word.

Climate change, food security and sustaining peace

Dr Florian Krampe is a Researcher in Climate Change and Risk Project of Stockholm International Peace Research Institute.

‘We have succeeded at keeping famine at bay, we have not kept suffering at bay’, said UN Secretary-General Antonio Guterres while briefing members of the UN Security Council on 12 October. Explaining the impediments to an effective response to the risks of famine in north-east Nigeria, Somalia, South Sudan and Yemen, and, Guterres named conflict as a root cause of famine.

Guterres is right. In fact, a recent report on the state of the world’s food security—jointly published by Food and Agriculture Organization (FAO), International Fund for Agricultural Development (IFAD), United Nations Children’s Fund (UNICEF), World Food Programme (WFP) and World Health Organization (WHO)—puts the number of people affected both by hunger and conflict at 489 million. That is about 60 per cent of the 815 million people suffering worldwide from hunger and malnutrition. The report further details that the connection between conflict and hunger is especially notable ‘where the food security impacts of conflict were compounded by droughts or floods, linked in part to the El Niño phenomenon’. There appears to be a general consensus among UN agencies that conflict, as a root cause of hunger and malnutrition, needs to be addressed. Evidently, this is easier said than done.

Complex conflict, comprehensive peacebuilding

Building peace in post-conflict countries is rarely, if ever, straightforward. International actors often face insurmountable challenges when programming and implementing their projects. In addition to stopping violence, the aim of their work is to set states and societies on a peaceful path. Yet, the food-security situation clearly shows that the indirect, long-term effects of war further exaggerate this challenge. Many of these challenges relate to political and social aspects of post-war countries, such as human rights abuses, reconciliation and justice, as well as economic recovery and public health. Environmental and climate change expose post-conflict states further to new risks, exaggerating the human costs of war long after active combat has ceased.

The Lake Chad Basin is sadly one of the key examples of this dynamic. The ongoing insurgency in the region and the continued shrinking of Lake Chad (which is the main source of livelihood for millions of inhabitants) are causing a massive humanitarian crisis, intensifying the fragile security situation and increasing the cross-border displacement of populations. The Report of the Secretary-General points out: ‘Some 10.7 million people across the Lake Chad Basin region currently need humanitarian assistance, including 8.5 million in Nigeria.’ According to the report, 7.2 million people currently suffer severe food insecurity in the region, of which 4.7 million are located in the north-eastern Nigeria.

The interconnectedness of food security, natural resources, peace and conflict is not new to anyone familiar with fragile and conflict-affected states. The question is how to reverse this negative spiral. It is instrumental to focus on the questions of how interventions are interacting with other factors, what negative side effects may appear and how to reduce or, even better, prevent them. But, most of all, the reversal of this spiral involves developing a mindset that goes beyond ‘do no harm’ doctrines. In practice, that means focus and emphasis must be placed on opportunities and synergies to equally end hunger, reduce poverty, foster a healthy ecosystem, support sustainable natural resource management and, ultimately, to help sustain peace.

Pic by Neil Palmer (CIAT). A farmer at work in Kenya’s Mount Kenya region. (from Wiki)

How can governments and international agencies better respond to food security in post-conflict settings?

Acknowledge complexity. Involved actors must acknowledge the complex underlying dimensions of the problem. While Guterres emphasizes conflict as a root cause, he downplayed the role of environmental and climate change—both in his current and previous assessments. His previous assessment of the humanitarian crisis around Lake Chad fell short of addressing and acknowledging the underlying environmental dynamics that significantly affect the water and food security of local communities in the region and make them vulnerable to insurgent recruitment.

Improve assessment capacity. There is a need for more integrated risk assessments that focus on climate and environmental factors, but also social, political and economics. For example, climate-related security risks are not just related to climate but are part of larger social–ecological processes and interactions that need to be better understood. The assessments must seek to understand the role of women, local contexts and the inclusion of marginalized groups, especially with regard to access to natural resources.

Be prepared. Both states and international state actors have to understand the state–society relationship—before, during and after crisis. One key way governments can increase their ability to cope with shock is to simply be prepared. This is of course difficult in conflict-affected states and, admittedly, often one of the actual sources of post-conflict fragility. Yet, supporting government efforts to focus on the state–society relationship is necessary, because a state that focuses on the delivery of services to those it is suppose to serve is a state that cares about its inhabitants. Service delivery is fundamental in two ways: one, it reduces vulnerability and increases resilience; and two, it reduces distrust towards the government. Without a certain level of trust between state and society, shocks cannot be adequately addressed.

Think holistically. Lastly, there is a tendency, especially among UN agencies—often due to their mandate—to treat issues such as food security and natural resources as technical issues in need of a technical solution. This approach is doomed to fail because, fundamentally, access to food, land and other natural resources—like the conflicts themselves—are deeply political processes. They need to be treated as such.

Future steps

Unquestionably, within the past year with Guterres at the helm, space has opened within the UN system to more frequently discuss the questions of sustaining peace and conflict prevention. The strategies above are some examples that enable national and international actors to successfully get at the root causes of food insecurity in conflict-affected states. Each of these steps must explicitly include a focus on gender as a crucial, yet often neglected, dimension. Most importantly, in addition to understanding risk, there is a need to further shift the discourse of intervention programming and implementation towards opportunity. Will such an approach stop conflicts and prevent people from taking up arms? Absolutely not. But the evidence is clear that it will make it much harder for insurgent groups to mobilize people for their cause.

Why should Bharat have to feed India at its cost?

Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.

Mohan Guruswamy

It was around the mid-1960s when the Paddock brothers, Paul and William, the ‘prophets of doom’, predicted that in another decade, recurring famines and an acute shortage of food grains would push India towards disaster. Stanford University Professor Paul R. Ehrlich in his 1968 best selling book The Population Bomb warned of the mass starvation of humans in the 1970s and 1980s in countries like India due to over population.

Their prophecies were based on a rising shortage of food because of droughts, which forced India to import 10 million tonnes of grain in 1965-66 and a similar amount a year before. Little did they know that thanks to quick adoption of a new technology by Indian farmers, the country would more than double its annual wheat production from 11.28 million tonnes in 1962-63 to more than twice that within ten years to 24.99 million tonnes. It was 71.26 million tonnes in 2007. Similarly rice production also grew spectacularly from 34.48 million tonnes to almost 90 million tonnes in 2007.

Total food grains production in India reached an all-time high of 251.12 million tonnes (MT) in FY15. Rice and wheat production in the country stood at 102.54 MT and 90.78 MT, respectively. India is among the 15 leading exporters of agricultural products in the world.  The value of which was Rs.1.31 lakh crores in FY15. 

Despite its falling share of GDP, agriculture plays a vital role in India’s economy. Over 58 per cent of the rural households depend on agriculture as their principal means of livelihood. Census 2011 says there are 118.9 million cultivators across the country or 24.6 per cent of the total workforce of over 481 million. In addition there are 144 million persons employed as agricultural laborers.  If we add the number of cultivators and agricultural laborers, it would be around 263 million or 22 percent of the population.  As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 16.1 per cent of the Gross Value Added (GVA) during 2014–15 at 2011–12 prices.  This about sums up what ails our Agriculture- its contribution to the GDP is fast dwindling, now about 13.7 per cent, and it still sustains almost 60 per cent of the population.

With 157.35 million hectares, India holds the world’s second largest agricultural land area. India has about 20 agro-climatic regions, and all 15 major climates in the world exist here. Consequently it is a large producer of a wide variety of foods. India is the world’s largest producer of spices, pulses, milk, tea, cashew and jute; and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds. Further, India is 2nd in global production of fruits and vegetables, and is the largest producer of mango and banana. It also has the highest productivity of grapes in the world. Agricultural export constitutes 10 per cent of the country’s exports and is the fourth-largest exported principal commodity.

According to the Agriculture Census, only 58.1 million hectares of land was actually irrigated in India. Of this 38 percent was from surface water and 62 per cent was from groundwater. India has the world’s largest groundwater well equipped irrigation system.

There is a flip-side to this great Indian agriculture story.

The Indian subcontinent boasts nearly half the world’s hungry people. Half of all children under five years of age in South Asia are malnourished, which is more than even sub-Saharan Africa.

More than 65 per cent of the farmland consists of marginal and small farms less than one hectare in size. Moreover, because of population growth, the average farm size has been decreasing.  The average size of operational holdings has almost halved since 1970 to 1.05 ha. Approximately 92 million households or 490 million people are dependent on marginal or small farm holdings as per the 2001 census. This translates into 60 per cent of rural population or 42 per cent of total population.

About 70 per cent of India lives in rural areas and all-weather roads do not connect about 40 per cent of rural habitations. Lack of proper transport facility and inadequate post harvesting methods, food processing and transportation of foodstuffs has meant an annual wastage of Rs. 50,000 crores, out of an out of about Rs.370, 000 crores.

There is a pronounced bias in the government’s procurement policy, with Punjab, Haryana, coastal AP and western UP accounting for the bulk (83.51 per cent) of the procurement. The food subsidy bill has increased from Rs. 24500 crores in 1990-91 to Rs. 1.75 lakh crores in 2001-02 to Rs. 2.31 lakh crores in 2016. Instead of being the buyer of last resort FCI has become the preferred buyer for the farmers. The government policy has resulted in mountains of food-grains coinciding with starvation deaths. A few regions of concentrated rural prosperity.

Image: wikipedia

The total subsidy provided to agricultural consumers by way of fertilizers and free power has quadrupled from Rs. 73000 crores in 1992-93, to Rs. 3.04 lakh crores now. While the subsidy was launched to reach the lower rung farmers, it has mostly benefited the well-off farmers. Free power has also meant a huge pressure on depleting groundwater resources.

These huge subsidies come at a cost. Thus, public investment in agriculture, in real terms, had witnessed a steady decline from the Sixth Five-Year Plan onwards. With the exception of the Tenth Plan, public investment has consistently declined in real terms (at 1999-2000 prices) from Rs.64, 012 crores during the Sixth Plan (1980-85) to Rs 52,107 crores during the Seventh Plan (1985-90), Rs 45,565 crores during the Eighth Plan (1992-97) and about Rs 42,226 crores during Ninth Plan (1997-2002).

Share of agriculture in total Gross Capital Formation (GCF) at 93-94 prices has halved from 15.44 per cent to 7.0 per cent in 2000-01. In 2001-02 almost half of the amount allocated to irrigation was actually spent on power generation. While it makes more economic sense to focus on minor irrigation schemes, major and medium irrigation projects have accounted for more than three fourth of the planned funds

By 2050, India’s population is expected to reach 1.7 billion, which will then be equivalent to nearly that of China and the US combined. A fundamental question then is can India feed 1.7 billion people properly? In the four decades starting 1965-66, wheat production in Punjab and Haryana has risen nine-fold, while rice production increased by more than 30 times. These two states and parts of Andhra Pradesh and Uttar Pradesh now not only produce enough to feed the country but to leave a significant surplus for export.  

Farm outputs in India in recent years have been setting new records. It has gone up from 208 MT in 2005-06 to an estimated 251 MT in 2014-15. Even accounting for population growth during this period, the country would need probably around 225 to 230 MT to feed its people. There is one huge paradox implicit in this. Record food production is depressing prices. No wonder farmers with marketable surpluses are restive.

India is producing enough food to feed its people, now and in the foreseeable future.   Since food production is no longer the issue, putting economic power into the hands of the vast rural poor becomes the issue.

The first focus should be on separating them from their smallholdings by offering more gainful vocations. With the level of skills prevailing, only the construction sector can immediately absorb the tens of millions that will be released.  Government must step up its expenditures for infrastructure and habitations to create a demand for labor. The land released can be consolidated into larger holdings by easy credit to facilitate accumulation of smaller holdings to create more productive farms.

Finally the entire government machinery geared to controlling food prices to satisfy the urban population should be dismantled. If a farmer has to buy a motorcycle or even a tractor he pays globally comparative prices, so why should he make food available to the modern and industrial sector at the worlds lowest prices?

Why should Bharat have to feed India at its cost?

OBOR: Bunkum and Incredulity.

Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.

Mohan Guruswamy

Some days back China hosted a well-attended and hugely touted conference to promote its One Belt, One Road (OBOR) initiative. This initiative also known sometimes as the New Silk Road and Maritime Silk Route initiatives have been hailed or condemned by commentators all over the world as a “game changer” and China’s big play to seek world domination. Both the fears and the optimism are unfounded. 

The OBOR is a project meant to very simply get out Chinese reserves invested in western banks into investments where it will fetch a higher rate of return; and to take up the slack from the huge over capacity problem that plagues the Chinese economy.  Speaking at the conference, President Xi Jinping announced that Beijing would advance 380 billion Yuan or $55 billion to support OBOR. This is a far cry from the huge figures, sometimes as high as $750 billion to $ One trillion, bandied about.


While economists are generally skeptical about China’s goals and intentions, strategists – mostly the garden-variety Indian military types – have endowed this project with sinister overtones.  I was on a TV show a couple of days ago where both the prominent anchor and a prominent commentator of the unempirical stuff that passes off as strategic thought, raised the issue of the so-called “String of Pearls” (SOP). To them it seemed that every port or airport where a Chinese company is the contractor had a military purpose?

The “String of Pearls” is a bogus idea. It was cooked up by consultants working for a CIA and US DOD tied company called Booz Allen Hamilton and was given much traction by some well known Indian “strategic thinkers.” I was once in a conference where Admiral Dennis Blair former Chief of the US Navy and later Director of National Intelligence to President Obama was asked about it. He called it a stupid notion and said that no one who has run a large navy or held a responsible position in a navy will ever say an Oceanside blockade is possible. He explicitly and loudly said to Indian strategists who harped on SOP that no navy could encircle a country with a few ports.

The question that we need to ponder over a bit is as to how long will these “ports” survive after the outbreak of general hostilities? The IAF and IN have enough airpower at hand to sort them out, and our navy can effectively blockade hostile ports in the neighborhood. It may be noted that the IAF has operationalized an airbase in Thanjavur and will fly SU30 MKI’s from there. The IN deploys MIG29K fighters as well as P-8i Poseidon maritime surveillance and attack aircraft and a formidable fleet of combat vessels. We have not been exactly sleeping or need to be overly worried. The same Sri Lanka that once hosted a Chinese Jinn class nuclear submarine ostensibly on a goodwill mission last week turned away a PLAN conventional submarine wanting to pick up supplies.

Now to the economics of OBOR. China claims that OBOR is “based on principles of mutual benefit and that it is not interested in interfering in the participating countries’ internal affairs.” But there is a reality most of our commentators do not see or cannot understand. China has accumulated foreign exchange reserves of $ 3.5 trillion.  The capital it claims it is prepared to subscribe for the NDB, AIIB and Silk Road Fund would amount to only around 6-7% of its total foreign exchange reserves invested in western banks.  

Since these China promoted institutions will be providing infrastructure lending rather than grants, the return on capital from these investments could be significantly higher than the returns China is getting from its foreign exchange reserves currently invested in low-yielding US government bonds. It’s very simple. China needs to get value for its money and also help its demand starved industries.  And they have found a typically Chinese solution to it and are making a virtue of a necessity.

Look at it from another angle. The US dollar is also steadily depreciating in the long term against other major currencies. With no interest and with depreciation factored in China’s huge reserves, accumulated by extracting surpluses in its sweat shops, are steadily shrinking in value. The problem that Beijing seeks to grapple is this. 

One way is to put these funds to work in investment starved countries in Africa and Asia and assures themselves of returns for a long time to come.  In some, the birds have come home to roost quite early. The grandiose Hambantota port project in Sri Lanka, which once had the same bunch of Indian “strategic thinkers” in a tizzy hosts no ships and doesn’t earn very much. China is now pressurizing the Sri Lankans to service the debt and is seeking to extract some more in lieu of that. Much of the Hambantota investment has already be recouped by China by way of material and labor supplied to complete the project. That’s why one prominent European commentator calls OBOR – One Belt, One Road and One Trap.

Like Sri Lanka, some of other intended beneficiaries have now begun to ask questions about the utility and intentions of OBOR. The influential Pakistani newspaper “Dawn” has said: “But the main thrust of the plan actually lies in agriculture, contrary to the image of CPEC as a massive industrial and transport undertaking, involving power plants and highways. The plan acquires its greatest specificity, and lays out the largest number of projects and plans for their facilitation, in agriculture.” This top Pakistani newspaper then questions the benefits that will arise from linking mostly dry and barren Xinjiang, and in particular the predominantly Turkestani Muslim Kashgar prefecture with its restive four million people to an increasingly water starved and already much troubled Pakistan and its 180 million?

Much is being made about the overland link between China and Europe by rail and road links. Most commentators seem to miss that the Trans-Siberian Railway line from Vladivostok to Moscow is almost a hundred years old. Its capacity can be beefed up. Yet overland freight costs will always be much more expensive than sea freight costs. Business is about cuttings costs and taking the least expensive options. No one with commonsense will prefer to shift by land what can be shipped. 

Others make much of China’s so-called Malacca dilemma. Well the Artic route is opening up and the real Malacca dilemma soon will be the rapid decrease in freighters through it.

The Cost and Consequences of Demonetization?

Mohan Guruswamy is Chairman and founder of Centre for Policy Alternatives, New Delhi, India. He has over three decades of experience in government, industry and academia. He can be contacted at mohanguru[at]gmail.com.

Mohan Guruswamy

It now seems that Rs.14.97L crores or almost 97% of the Rs.500 and Rs.1000 notes “demonetized” by the Modi government are now in the banks. On November 8 when he made the announcement, the Prime Minister listed the three objectives for removing Rs. 15.40L crores from the system were to filter out the “black”, counterfeit and terrorist cash from the economy.  This was undeniably a laudable objective, but what did it fetch in return must be a question that needs to be answered?

Sources in the government seemed to believe that about Rs.4-5L crores would not be deposited back as they would be money with dubious antecedents. This would then be the RBI’s bonus, which could be used to refinance the NPA’s burdened PSU banks. But this is not to be and most of the cash outside, in flow or stock, has been deposited. So what was said to be the unsaid expectation is now best left unsaid.

But this doesn’t mean that the three main objectives stated by Narendra Modi remain unrealized. Quite clearly there was a good deal of tax-evaded income, counterfeit notes and terrorist funds in the system. Only counterfeit cash would have been filtered out in this first filtration. The tax-evaded incomes will now be searched out and large deposits from the usual suspects and unexpected sources will be scanned with diligence, both for the nations as well as the tax collectors benefit. How much will fetch the exchequer is not clear, but we can safely assume it will be a tidy sum.

Last year the RBI recorded filtering out about Rs.29 crores of counterfeit notes. But not all counterfeits go back to the banks, though in theory at some stage or the other they will have to. How much could this be? We have often heard of a figure of about Rs.20, 000 crores of locally manufactured and Pakistani counterfeits in circulation. If it is in the flow these notes will sooner or later be intercepted at the final stage of their life when they comes to the RBI for their obsequies. But a good part will also be in stock and we will never know how much will end up in the Ganges, like it was shown on TV on November 9?

220px-500_inr_obs_lrTo be sure there is huge tax evasion in our system. Even if the National Institute for Public Finance and Policy (NIPFP), the Ministry of Finance’s in house think-tank, estimation of a parallel economy equal to about 68% of the GDP is not accepted and the figure of 20-25% often cited by the multilateral agencies like the IMF and other authorities is accepted, we are looking a parallel economy of about Rs.30L crores. This implies about Rs.10L crores of lost taxes.

The demonetization exercise would not fetch even a small fraction of it, largely because most of the undeclared income undergoes metamorphosis into property, gold and foreign holdings leaving only about 4-5% within the cash system. So at the IMF end we are looking for about Rs.1-1.5L crores at least and at the NIPFP end we are looking for about Rs.3-4.5L crores at least.  The tax gains thus could at best be between Rs.50, 000 crores and Rs.1.5L crores.

Now we hear murmurs of expectations of about Rs.4L crores, which if so suggests that the NIPFP estimates are closer to the reality? After imposing penalties (30%+30%) this should fetch the government about Rs.2.4L crores as taxation.

But remember this is for the most part of it a one-time exercise. All our past experiences show we revert back to past practices and habits. But there are only so many demonetizations one can have in a lifetime. Frequent demonetizations will only diminish the credibility of the rupee and RBI. With currency no longer linked to gold, its value is only in its credibility and no government should keep risking this.

Against this one time gain of at best about Rs.2.4L crores what did we lose? The loss due to the unprecedented drop in production and income to the economy this year is now widely accepted by economists to be around 2% of GDP. This is almost Rs.3L crores. The cost of printing replacement notes is expected to be Rs.40-50, 000 crores.

There are huge human costs implicit too.  India has a work force of close to 450 million. Of these only 7% are in the organized sector. Out of these 31 million about 24 million are employed by the state or state owned enterprises. Of the vast reservoir of over 415 million employed in the unorganized sector about half are engaged in the farm sector, another 10% each in construction, small-scale manufacture and retail.

These are mostly daily wageworkers and mostly earning less than the officially decreed minimum wages. The average daily wage in India is Rs.272, which means that it is essential to have a good part of that for a typical family to have to escape starvation every day. Just visualize the cold hearths in these homes and children going to bed cold and hungry. At least 22 crores daily workers have suffered loss of work. We will have to await this bill.

Millions of farmers too have lost crops and produce due to the sudden drought of cash, which has impeded both sowing and harvesting. Farmers and the retail trade, which sells perishables like fruits and vegetables, have suffered huge losses due to the abrupt compression of demand induced by the demonetization. The motorbike industry has for long been the bellwether of rural prosperity. Year-on-year sales at Hero MotoCorp, the market leader and the worlds largest two wheeler producer, slid by more than a third in December. According to the research group Nielsen, fast-moving consumer goods, usually a reliable growth sector, retrenched by 1-1.5% in November have been hit harder.

Data released by the Center for Monitoring the Indian Economy (CMIE) shows investment proposals amounting to only Rs.1.25L crores in the October-December quarter as compared with an average of Rs.2.36L crores worth of new investments seen per quarter in the preceding nine quarters that the Narendra Modi government has been in power. While 227 new investment proposals worth Rs.8, 800 crore were announced during the quarter till 8 November, only 177 investment proposals worth Rs.43, 700 crore came in between 9 November and 31 December. The huge post demonetization fall in investment is clearly apparent. 

The big question is whether the slowdown of investment is temporary or long term? It can be plausibly argued that local investment will be back but one cannot say the same about foreign direct investment. Often foreign investors look at several location options simultaneously and once a choice is made that investment are very simply gone forever.

Quite clearly the losses outweigh the gains. And did it achieve anything? Huge volumes of new currency notes have again been accumulating with individuals and corporations. Bureaucratic and political corruption is back as before. The only palpable gain seems to be a stop of high quality high value counterfeits from Pakistani security presses. But that too will pick up in due course. It wont is long before its business as usual.

The topmost priority for the government now should be is to remonetize the economy fully. Unless remonetization is complete, growth cannot be restored and employment cannot be generated.