It’s a no green signal from the farm world

Himanshu

In a virtual rally, the Prime Minister blamed the Opposition parties for misleading farmers about the three Bills on agriculture, in Parliament. While the Opposition may have taken up the cudgels recently, the fact is that farmers have been protesting against the Bills ever since it was promulgated as ordinances in June. These are The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, and the Essential Commodities (Amendment) Bill, 2020. The resignation of Food Processing Industries Minister (and Shiromani Akali Dal MP), Harsimrat Kaur Badal, from the Union Cabinet, and dissenting voices from various mass organisations affiliated to the Rashtriya Swayamsevak Sangh suggest that the opposition to the Bills may not be politically motivated; rather, it may be a reflection of the genuine concerns of farmers.

In brief, the Bills aim to do away with government interference in agricultural trade by creating trading areas free of middlemen and government taxes outside the structure of Agricultural Produce Market Committees (APMCs) along with removing restrictions of private stockholding of agricultural produce. Attempts to reform the APMC are not new and have been part of the agenda of successive governments for the last two decades. Most farmer organisations also agree that there is excessive political interference and there is need for reform as far as functioning of mandis are concerned.

No consultation

Several reforms at the level of the central government as well as at the State level have been introduced and welcomed by farmers. However, in this particular case, the issue is not about the Bills; it is also about the process of their introduction. As was pointed out by Ms. Badal, the government has failed to have or hold any discussion with the various stakeholders including farmers and middlemen. This is also true when it comes to consultation with State governments even though the subject of trade and agriculture are part of subjects on the State list. The attempt to pass the Bills without proper consultation adds to the mistrust among various stakeholders including State governments. While the lack of consultation has certainly added to the element of mistrust between the government and farmers, some of the issues raised by farmer organisations are also genuine; recent trends in agricultural prices and incomes have only confirmed these fears.

While farmer organisations see these Bills as part of the larger agenda of corporatisation of agriculture and a withdrawal of government support, the immediate concern has been the attempt to weaken the APMC mandis and eventual withdrawal of the Minimum Support Prices (MSP) guaranteed by the government. Although the government has clarified that these Bills do not imply withdrawal of procurement by the State at MSP, there is a genuine fear among farmers about the true intentions of the government. The mistrust is not unfounded given the track record of this government on many issues including demonetisation of 2016, the introduction of Goods and Services Tax and so on. There may not be direct evidence of crony capitalism, but the entry, in a big way, of two of the biggest corporate groups (Adani and Reliance) in food and agricultural retail and the timing of the Bills have not gone unnoticed.

Reflects poor understanding

The idea of allowing greater participation of traders and farmers outside the APMC has already been in place in different form. Even otherwise, APMCs account for less than a fourth of total agricultural trade. But APMCs do play an important role of price discovery essential for agricultural trade and production choices. The vilification of APMCs and the middlemen who facilitate trade in these mandis is a poor reflection of the understanding of functioning of agricultural markets. The middlemen are a part of the larger ecosystem of agricultural trade, with deep links between farmers and traders. Most farmers are familiar with the functioning of mandis and see it as an essential part of agricultural trade despite shortcomings. While the proposed Bills do not do away with the APMC mandis, the preference for corporate interests at the cost of farmers’ interests and a lack of regulation in these non-APMC mandis are cause for concern. The absence of any regulation in non-APMC mandis is being seen as a precursor to the withdrawal of the guarantee of MSP-based procurement.

The Bihar example

The dominant concern in this regard has been expressed by farmers in Punjab and Haryana. Farmers in these States have genuine concern about the continuance of the MSP-based public procurement given the large-scale procurement operations in these States. These fears gain strength with the experience of States such as Bihar which abolished APMCs in 2006. After the abolition of mandis, farmers in Bihar on average received lower prices compared to the MSP for most crops. For example, as against the MSP of ₹1,850 a quintal for maize, most farmers in Bihar reported selling their produce at less than ₹1,000 a quintal. Despite the shortcomings and regional variations, farmers still see the APMC mandis as essential to ensuring the survival of MSP regime.

While retail prices have remained high, data from the Wholesale Price Index (WPI) suggest a deceleration in farm gate prices for most agricultural produce. This has happened despite increased procurement through the MSP-based regime for paddy and wheat. Decline in basmati rice prices by more than 30% and despite higher international prices suggests the limitation of market intervention in raising farm gate prices. For most crops where MSP-led procurement is non-existent, the decline has been sharper. Even cash crops such as cotton have seen a collapse in prices in the absence of government intervention. With rising input costs, farmers do not see the market providing them remunerative prices. At the same time, ad hoc interventions by government such as raising import duties on masur and a ban on onion exports also raise suspicion about the intent of the government to leave the price discovery mechanism on the market. The protests by farmers are essentially a reflection of the mistrust between farmers and the stated objective of these reforms.

Himanshu is Associate Professor, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi

The results of the NSO survey 2017-18 are truly bizarre

Surjit S Bhalla
Some results of the National Statistical Office’s consumer expenditure survey (CES) for 2017-18 have been leaked. It is hoped that the official release (not endorsement for the reasons enunciated below) of the unit-level data will follow soon, so that researchers, analysts, politicians and even former prime ministers can evaluate for themselves how bad the NSO data really are.

The previous NSO survey on employment (PLFS) estimated the population in 2017-18 to be 1,074 million, when even mathematically challenged individuals estimated it to be upwards of 1,300 million (actually 1,339 million). That error of a 265 million under-estimation is a national record for the highest under-estimation of such a basic number — most NSO surveys have under-estimated population by around 5-10 per cent. The underestimation in 2017-18 at 20 per cent is a record.

This under-estimation has consequences for a major policy variable of interest — jobs and job growth. The unemployment rate is not affected by the estimate of aggregate population; but the number of jobs is affected. Most scholars have estimated employment generated by the PLFS data to decline by around 18 million in the number of jobs in 2017-18 relative to 2011-12. This is according to the usual status of employment, a measure which counts both half-time work (employed for 30-182 days) and full-time work (employed for more than 182 days) as full-time employment. In a detailed (forthcoming) paper on employment, Tirtha Das and I find that the desired full-time jobs (defined as principal status) increased by eight million between 2011-12 and 2017-18 — an increase not that different from what was obtained in the high growth years of 2004-5 to 2011-12 (a 14 million increase, but over seven years).

It is much easier to count people as employed or not employed, than to ask about their monthly per capita expenditure. This is where the world record is on the way to being established. The CES survey for 2017-18 shows that the per person real monthly expenditure (mpce in NSO parlance and not income as mistakenly assumed by some) declined from Rs 1,573 in 2011-12 to Rs 1,514 in 2017-18 (data converted from 2009-10 prices to 2011-12 prices to make it consistent with other data)

In my book, Imagine There’s No Country, I had documented how there was a declining trend in the amount captured by the surveys over time. Household surveys (S) were capturing less and less of consumption as revealed by an alternative calculation — the national accounts (NA). While the two definitions (survey and national accounts) are not identical, they are broadly comparable.

The average S/NA ratio, around the world, was in the mid 80s in the 1980s, that is, if the NA estimate of per-capita consumption was 100, then the household survey would estimate it to be 85. It is worth remembering that the S/NA ratio in India in the 1950’s and 1960’s was upwards of 95 per cent. Too high to be true? In a manner of speaking, yes. For then, the household survey provided the estimate of consumption for national accounts.

But, with time, economies became complicated, and the national accounts data moved with the times, became more sophisticated and captured the trends in the economy much better than the surveys. Survey organisations like the NSO refused to move. In 1983, the S/NA ratio in India collapsed to 63 per cent from the high 70s level just a decade earlier. It was to be 30 years later (in 2012) when the world reached the low 60’s average.

That year (2011-12), India recorded a 55 per cent ratio for S/NA. Just six years later (2017-18), the S/NA ratio in India has collapsed to just 33 per cent — the second lowest ever recorded around the world for economies without hyper-inflation (when S/NA ratio really gets distorted) and with populations above 10 million. The worst ever was Nigeria in 2009 with a S/NA ratio of 27.2 per cent.

There is yet another comparison one can make. The two most recent consumption surveys in India, just six years apart, yield a decline of 22 percentage points. This is the second worst sequential decline in the world. The worst was Pakistan in 2001 when the S/NA ratio was 46.9 per cent, down 26.9 percentage points from the 73.8 per cent estimate recorded in 1998.

The secular decline in NSO has now persisted for some 50 years and marks a sad occasion for an institution that was a trend setting statistical institution in not only the emerging economies, but in the world as well. In the early 1950s, the world famous statistician P C Mahalanobis was its head.

I was privileged to be a member of the first National Statistical Commission of India headed by an internationally renowned economist Suresh Tendulkar. I was sent to Calcutta by Tendulkar to interact with the NSSO and to find out why the Indian S/NA ratio had sharply declined and what could be done to improve survey response. I met with little success and came back frustrated with the ancient techniques being followed by them.

The most recent statistical commission chairman, P C Mohanan, was a colleague. He has been quoted as not being surprised with the decision of the government to not accept the findings of the latest record-low NSO survey. His view is that the government is suppressing reports that are not “favourable”.

If I thought that the NSO consumption surveys were misleading and not acceptable in 2002 and 2006, I can be forgiven for thinking that the surveys are even less acceptable today. The results of the NSO survey 2017-18 are truly bizarre — a decline in average real consumption of 0.6 percentage per year between 2011-12 and 2017-18, when the NA consumption estimate is of a positive 5.8 per cent annual growth. As discussed above, the NSO estimate for 2017-18 is so out of the box that it is actually out of any (reasonable) ball-park. If the government does not accept the findings of the survey (as has been suggested by a recent press release) then a genuine reform of the NSO can actually begin. Even if it does not return to its previous glory, a reformed NSO can become a respectable institution. That will not be easy, but it is a path worth embarking upon.

I have been surprised by how many respected analysts have pointed to the “findings” of the NSO 2017-18 and are relating it to the slowdown in the economy in 2019-20. Some of these very same “analysts” were cheering the RBI/MPC a year ago when it raised the repo rate to 6.5 per cent in June 2018, the very last month of the 2017-18 survey. Their reason for cheering the MPC — growth was too high, so high that it was leading to high and accelerating inflation. Both views cannot be right, and it is worse than disingenuous to hold both views simultaneously. The so-called experts have to make up their mind — if growth was disturbingly high in June 2018, then it cannot under any stretch of the imagination be argued that the CES 2017-18 survey is even close to being right.

Not every government report should be accepted. Just like individuals fail exams, and editors reject papers (and columns), sometimes, institutions fail to produce a credible report. But, I do believe that the unit-level data should be released. Let the world, and experts, find out for themselves how truly informative and credible the NSO CES data really are.

This article first appeared in the print edition on November 27, 2019 under the title ‘Rebuilding credibility’. The writer is executive director IMF, representing India, Sri Lanka, Bangladesh and Bhutan.

Combating Hunger, Malnutrition and National dishonour

Harsh Mander
The abiding disgrace of new India is that despite unprecedented quantities of wealth and the vulgar ostentation which has become customary in the gaudy glitter of city life, India is unable to overcome hunger and malnourishment. This is even more unconscionable when government warehouses are overflowing with stocks of rotting rice and wheat. The 2019 Global Hunger Index (GHI) report brings sombre tidings this year: India’s poorer neighbours — Bangladesh, Nepal, and even Pakistan — have overtaken India in the battle against hunger.

Hunger is the failure to access the calories that are necessary to sustain an active and healthy life. It results in intense human suffering and indignity, as parents are forced to helplessly watch their children ache as they sleep hungry, as their brains and bodies are unable to grow to full potential, and, as they fall ill too often and are snatched away too early.

This is a colossal national dishonour for two reasons. One, this suffering is entirely preventable. Given appropriate public policies — sensitively designed, adequately resourced and effectively implemented — the country has both the wealth and the food stocks many times over to end hunger entirely. The relative success of our neighbours in combating hunger — Nepal emerging from 15 years of civil war and Pakistan still torn by internal conflict — is a sobering reminder of what India has not accomplished. Two, this failure does not spur public outrage and the introspection that it should.

The GHI report ranks India at a lowly 102 out of 117 countries listed. The GHI scores are based on four indicators — undernourishment (the share of population with insufficient calorie intake); child wasting (children with low weight for height, indicating acute undernutrition); child stunting (children with low height for age, reflecting chronic undernutrition); and child mortality (death rate of children under five).

Among all the countries included in the report, India has the highest rate of child wasting (which rose from the 2008-2012 level of 16.5 per cent to 20.8 per cent). Its child stunting rate (at 37.9 per cent) also remains shockingly high.

The report is instructive as it explains why Bangladesh and Nepal have surged ahead of a much wealthier India. The Bangladesh success story is attributed to pro-poor economic growth raising household incomes as well as significant improvements in “nutrition-sensitive” sectors like education, sanitation and health. Nepal, likewise, shows increased household wealth, maternal education, sanitation, health and nutrition programmes.

What must India do better to at least keep pace with its South Asian neighbours in tackling hunger? This is the question that Dipa Sinha, Parth Shrimali and I seek to answer in our essay in the latest 2018-19 India Exclusion Report of the Centre for Equity Studies.

We observe the cruel irony of the largest population of food-insecure people being food producers — farm workers, tenants, marginal and small farmers, fish workers and forest gatherers. To end hunger, food producers must be supported to receive adequate remuneration. We recommend sound measures to protect farmer incomes, including income transfers to farmers, minimum support-price guarantees and crop insurance, and a massive expansion of farm credit. For farm workers, a refocus on land reforms is called for, and, a greatly expanded and effectively managed rural employment guarantee programme with attention to land and watershed development, small irrigation and afforestation. There must also be an urgent and comprehensive shift to sustainable agricultural technologies less dependent on irrigation, chemical fertilisers and pesticides, to reverse our agri-ecological crisis.

The other large food-vulnerable population comprises informal workers. Hunger can’t be combated without addressing the burgeoning job crisis. It also entails labour reforms which protect job security, fair work conditions and social security of all workers. We also argue that the time has come for an urban employment guarantee programme, to help build basic public services and infrastructure for the urban poor — especially slum and pavement residents, and the homeless. This should also include employment in the care economy, with services for child-care, children and adults with disability and older persons.

The Public Distribution System must be universalised (excluding income tax payees), and should distribute not just cereals but also pulses and edible oils. Further, we need to reimagine it as a decentralised system where a variety of crops are procured and distributed locally. Both pre-school feeding and school meals need adequate budgets, and the meals should be supplemented with nutrient-rich foods such as dairy products, eggs and fruits. Social protection also entails universal pension for persons not covered by formal schemes, universal maternity entitlements to enable all women in informal work to rest and breast-feed their children, a vastly expanded creche scheme, and residential schools for homeless children and child workers.

Malnourishment results not just from inadequate food intakes, but also because food is not absorbed due to frequent infections caused by bad drinking water, poor sanitation and lack of healthcare. India’s nutrition failures are also because of persisting gaps in securing potable water to all citizens, and continued open defecation despite optimistic official reporting. There is an urgent requirement for a legally enforceable right to healthcare, with universal and free out-patient and hospital-based care, free diagnostics and free medicines.

All of this is not unknown. Yet, India continues to fail children born in impoverished households, to homeless people and single mothers, and to oppressed castes and social groups. Our economic policy continues to be trapped in an elite capture, dominated by measures that support big businesses to the exclusion of farmers and workers. Social rights are broken and betrayed.

At its core, the reason for India’s continuing failures to end hunger and malnutrition of its millions is the indifference of people who have never known the agony of involuntary hunger. This is ultimately the result of our enormous cultural comfort with inequality, our gravest and most culpable civilisational flaw.

The writer is a human rights worker and writer

The ‘Universal Basic Income’ Proposal

Editorial from Economic and Potitical Weekly

Imagine a world in which everyone is unconditionally given a subsistence-level income by the state. This, combined with access to well-functioning public services would be, to quote Jean Dreze, “a fool-proof way of safeguarding the right to dignified living.” The chapter on “Universal Basic Income (UBI): A Conversation With and Within the Mahatma” in the Economic Survey 2016–17 (ES) begins with this. But unfortunately, given self-imposed “fiscal prudence,” the proposed UBI, which is neither “universal” nor “basic”, requires the dismantling of the most socially necessary welfare schemes, namely, the Public Distribution System (PDS), the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the Mid-day Meal Scheme. The envisioned UBI turns out to be no more than a small compensatory transfer (or income top-up) to a part of the population, and that too, one that will require the government to prune or do away with in-kind transfers of food, guaranteed minimum days of wage work, and other public social security measures.  

The desire is to stick to budget neutrality even as its conception is the most illogical part of the UBI vision. In the face of the monstrous economic inequality that plagues the country, surely a proper UBI can be financed from income and wealth taxation of the very rich, as also, from indirect taxation of socially less desirable economic activities. Given that India has one of the lowest tax to gross domestic product ratios in the world, more so with respect to direct taxes (that include wealth and corporate taxes), it is inconceivable why the policymakers of this country cannot envisage a UBI that builds on higher tax revenue collections to expand the fiscal space.

Instead, a UBI as seen in the ES is anchored on minimising fiscal cost and pruning the government’s social-welfare administrative machinery. The chapter argues that the current social security system in India is bulky, inefficient, and in large part misallocates resources, and that these “realities” necessitate a serious thinking-through of better ways of spending public money for social welfare. It emphasises the gross misallocation of resources under six welfare schemes, in two simplistic maps which show that the shares of welfare spending in the poorer districts are less than the shares of poor persons in these districts. The UBI, the authors of the ES claim, is a way of rectifying this imbalance. However, any such rectification would assume a targeted cash transfer, not a UBI.

Further, it must not be overlooked that each of these welfare schemes has underlying mechanisms that ensure a safety net against market uncertainties. The PDS entails the state’s interventions in agricultural commodity markets that have historically resulted in more stable prices and a semblance of income security for farmers. The political currency of the public procurement system and minimum support prices is but an indication of the significance of such market interventions. The Mid-day Meal Scheme has shown that cooked meals in schools encourage school enrolment, apart from providing timely nutrition. The MGNREGS not only promises minimum days of wage work, but also creates and helps maintain locally planned public infrastructure, protects against seasonality of work, and provides some bargaining power to workers in rural labour-market wage setting. In fact the ES does make a passing reference—“replacing the PDS will increase market prices of cereals the poor face. Similarly, phasing down MGNREGS might reduce market wages for rural casual labour”—but goes on to make a case against these interventions.

Between 2004–05 and 2011–12, the offtake from the Food Corporation of India (FCI) grew by 71%; and household purchases through the PDS grew by 117%, indicating greater, more efficient coverage, while leakages in the PDS have come down from 54% to 35%. The ES extrapolates the leakage figures up to 2016, which points to a further reduction to 20.8%, without accounting for improvements in technology and expansion of coverage that must have occurred in the last five years. There has been a rise in rural wages, which in part is attributable to MGNREGS. Undeniably, rural infrastructure and more recently, farm assets are being created substantially under this scheme.

What is important today is that provisioning of social security services and goods has become a matter of political importance even in India’s northern states, as it has been for decades in the southern ones. In fact, in a few of these states, corruption and leakages have been reduced in the PDS and the MGNREGS even as they cover a greater proportion of the targeted population. This needs to be emulated in other states. To say that “the time is ripe for serious discussion” around a UBI that would entail dismantling existing hard-won social welfare measures, does not seek to build on past gains or social experience. The past decade has shown that the implementation of social welfare programmes can be improved by the participation of beneficiaries, ensuring greater transparency and accountability, the involvement of concerned non-governmental organisations, a degree of political will, and a proactive local administration.

Editorial from EPW,  Vol. 52, Issue No. 6, 11 Feb, 2017

The Universal Basic Income’s time may have come

Madan Sabnavis

The Economic Survey has traditionally been a document which gives us the latest on the state of the economy and provides some idea on the prospects for the year. 

Two things have changed in the last few years. Firstly, we get relatively better data on a regular basis on almost all economic indicators which denude to an extent the novelty of this document. Secondly, some high profile economists occupying the post of chief economic advisor have tended to re-orient the document towards being academic and theoretical. In fact, this trend has also been noticed in the RBI reports which are no longer meant for the common man but are for the academician, as it is hard to understand the cobwebs strewn all over the place with scenario analyses and a lot of jargon thrown in. This is the new phase of economic reporting from the official side. The Economic Survey this year has also done away with the detailed tables which were extremely useful. 

Pros and cons

This year, the Economic Survey has focused on the concept of universal basic income. The UBI is part of the acronym lexicon that has been in vogue with the NDA government — take the case of a programme being called INDRADHANUSH, and a campaign named JAM. It is felt that acronyms make it easier to remember what they stand for.

Now, the UBI has been presented in the usual style of a two-handed economist, with the pros and cons of the scheme listed and open to debate. There is a view that it is good for the nation but it can be implemented only after studying the effects and working of such a venture. 

Assuring a basic income for each and every individual or family is laudable as this should be the goal of any government in a developing country. This is normally measured by success in the areas of unemployment and poverty. The UBI also talks about actually moving away from all kinds of direct and indirect subsidies and passing them on to individuals through cash transfers so that they have the freedom to choose their living standard. 

This programme on the face of it sounds jumbled because we are talking of a socialist doctrine of providing basic income to all but mixing it with the capitalist mode of doing away with subsidies. 

The state’s role

To better understand the dilemma we need to ask a broader question as to what is the role of the state? The government is required in any country for addressing three economic objectives: bring about redistributive justice, enter areas where the private sector will not find attractive and creation of social infrastructure. Presently the government attempts to perform all the three roles with different levels of efficiency and success. 

Now, UBI can be debated from two angles. The first is whether governments should be giving an income without getting anything in return — an unconditional transfer. In most countries, these transfers are linked to an objective. Taking up some employment or sending children to school can be a requirement, which is how most conditional cash transfers work. In our case MGNREGS is a good example of conditional transfer where one takes up a job card and gets paid a daily wage. It is a different issue that there frauds occur and the work done is rudimentary to the extent of being meaningless. But this can always be tackled through better delivery and linkages with productive work such as, say, construction of rural infrastructure.

Providing free money is detrimental to society as it creates a moral hazard (which has been acknowledged in the Survey discourse) and is not connected with the use of money by the household. Poor households in particular have different priorities and may not be spending the money the way an economist would assume. 

About services

The second issue pertains to which services need to be discontinued with the amount involved getting into the transfer scheme. The present direct schemes pertain to food, fuel, fertilisers and interest. Fuel subsidy has been reduced to a large extent, but we also remain very vulnerable to global crude oil prices movement which can make inflation nasty and affect the conduct of monetary policy.

The last time there was a crude price shock, inflation would have risen more prodigiously had the subsidies not been in place. Food subsidy creates a problem because prices vary by almost 75-100 per cent across the country. For instance, rice can cost anywhere between ₹15 and ₹30 a kg; so too wheat. How do we ensure that households get enough to spend on food? The PDS ensures that there is a fixed price for these essentials; by doing away with we can again see pressure on inflation as food prices increase once the market is open. Today, the PDS forms a benchmark for dealers as they know that by charging a higher premium the poor would move to PDS.

Now the argument for UBI also meanders into the indirect subsidies that are provided by the Government, such as health and schooling. Can the Government actually abandon these responsibilities? Even in developed countries healthcare, education, and urban infrastructure are provided by the government and subsidised though the quality of services would be very different, say, between the US and India. Governments have to create social infrastructure; they cannot say the private sector can provide the same as the latter caters to only the elite classes with several entry barriers being erected for those who do not have minimum spending power.

Economic viability

One conclusion is that while providing a minimum basic income to all is essential, the state cannot do away with the indirect subsidy involved in the creation of social infrastructure. Also, plain vanilla transfers not linked to conditions leads to a mismatch of priorities between the Government and the individual and must be avoided. The system of linking an income with an activity is necessary to make the schemes viable. 

The task ahead is to ensure that these ‘conditions’ are well defined in terms of being acceptable from the economic standpoint. In the case of direct subsidies, even as we revel in the success of cash transfers and limiting the same on some products, crude oil touching $150 a barrel in future will seriously impact inflation and can come in the way of monetary policy. Clearly, the Government needs to think through these contingencies before they occur so that the country is better prepared.

(The writer is chief economist at CARE Rating)

The mirage of inclusive growth

Deepanshu Mohan

In the age we live in, the process of securing a persistent rate of higher economic growth is considered to be the ultimate means of achieving prosperity for all. Economists and policymakers insouciantly use the word ‘inclusive growth’ in penning down the objectives and rationale for every policy and reform measure.

It becomes pertinent thus to explore the underlying neo-liberalist idea of inclusive growth that fails to apply in evidence to the developing world context (specifically to India in South Asia).

The idea of inclusive growth has shaped our understanding of growth since the mid-1960s. The process of achieving such growth encompasses an inclusion of all sections as beneficiaries and partners in growth, and envisages that an inclusion of the excluded should be embedded in the growth process.

Such growth, as expected, by itself will then lead to a high elasticity of poverty reduction (higher reduction of poverty in per unit of growth), also reducing income inequalities at individual and group levels. 

Curve of inequality

Simon Kuznets (1966) explained how inequalities do not last for long. According to Kuznets, ‘Economic inequality increases over time while a country starts developing; however, after a certain average income is attained, inequality becomes to decrease’.

The curve of inequality — the Kuznets curve — is inversely U-shaped, where inequalities tend to decline after a point because of two reasons: Firstly, with higher economic growth, the tax revenue of governments is likely to increase, enabling them to spend more on infrastructural development, education, healthcare and skill development; particularly in backward areas where the need of such social investment is felt more, in improving opportunities for people lacking the capital to grow.

And secondly, after the initial period of economic growth and boom, the stated expectation of neo-liberal advocates is that it will trickle down to people, by creating more jobs and incomes for many.

Jagdish Bhagwati cites the need of ‘Track II’ reforms in developing countries where he calls for the government to massively spend the economic benefits from liberalising markers on healthcare, education, etc. for the initial growth to trickle down and achieve the principles of equity and sustainability.

 It just widens
In a her 2012 paper, Indira Hirway provides some useful empirical evidence from South Asia to debunk myths attached to ‘inclusive’ theoretical application of neo-liberalist version of economic growth. Hirway explains how, in spite of the adoption of pro-market policies in most South Asian countries, the level of income inequalities continue to widen.

Out of the 14 Asian countries studied, inequality has increased in 11 — including Sri Lanka, China, Cambodia, India, Indonesia and Nepal. Malaysia and Thailand were the only two countries where inequalities decreased at the margin. In the case of India, the Gini coefficient (a measure of income inequality) rose from 0.44 to 0.47 during the last decade.

The issue with the Indian case has primarily been with the implementation of Track II reforms where, in spite of higher, sustained economic growth levels from early 2000s, public spending on education and healthcare has remained drastically low (less than 3 per cent and 2 per cent of the GDP, respectively, till now). This has resulted in the accumulation of economic wealth in limited geographical city centres where economic prosperity is enjoyed by the few who directly accrue the benefits, leaving ‘the others’ entirely dependent on the government. Upward income mobility within these lower income classes remains an issue due to the lack of adequate education, health standards and access to increasing productive job opportunities.

In the field of employment and labour, scholars indicate a poor performance in generating productive employment with ‘decent work’ conditions. In India, the unemployment rate increased from 1.96 per cent in 1993-94 to 2.2 per cent in 1999-2000, to 2.37 per cent in 2004-05 and to 2.06 per cent in 2009-10.

Though different reasons are cited for explaining this increase by economists, trends show the rate of growth of employment including the rate of growth of ‘decent work’ has been far from satisfactory.

This is not just true in the case of India but other developing economies as well. According to the ILO, during 1995-2006, open unemployment grew by 22 per cent, pegging the global unemployment rate at 6.3 per cent. While the output growth rate was much higher than job growth, it is appalling how the obsession with production as the ultimate factor of inclusive and consistent growth still wheels the imagination of our policymakers.

Need an alternative
A major limitation of the theory underlying the neoliberal policy framework is that it leaves two important macro-economic components outside its purview — natural resources or natural capital, and unpaid work or work that is outside the production boundary but within the general production boundary of the UN System of National Accounts. Both these exclusions are associated with the excluded sections of population, relevant for developing economies.

So, there is a strong need for policymakers in India and across the developing world to give a fresh look at the macroeconomic framework underlying the present policies. It is critical to end the tug of war between the growth and the redistribution phases as there is a clear lacuna between these two.

The mainstream growth process that creates exclusion as well as inequalities tends to overpower the redistribution process and intensifies exclusion in the process. As supported by Hirway, ‘both the growth phase and the redistribution phase should be complimentary to each other for the mainstream growth process to be inclusive’.

For this, first, the macroeconomic policy framework warrants a radical change, where we need a vision shift in moving from short term focus goals to a more long-term focus.

It is also important that growth in developing economies continues to remain more labour-intensive and broad-based, as a generation of production employment opportunities on a large scale is perhaps the best way for including the excluded and marginalized sections of the population. This can be achieved by investing more in the development of small and medium-scale enterprises and providing an easier line of credit to their development.

Secondly, it is critical to adopt a rights-based approach accepting the citizenship’s rights of people. Provision of education, healthcare, basic infrastructural needs are part of the basic rights of every citizen. A persistent increase in social investments such as education and healthcare are attached with long-term benefits and are part of a macro strategy for improving productivity of workers and for enhancing aggregate effective demand in the economy.

It would, therefore, be useful for developing economies to think afresh on the theoretical applications of existing neo-liberalist policies that somewhere have failed to include the excluded and in the process modify the theoretical basis of such policies to indigenize them more suitably with a longer term focus.

(The writer is executive director of Centre for International Economic Studies at OP Jindal Global University)

Limits of the Socio-Economic Caste Census 2011

Economic and Political Weekly 

It was the Ministry of Rural Development which, for close to five years beginning in 2010, designed, planned and oversaw the execution of the 2011 Socio Economic and Caste Census (SECC), whose first batch of results were released earlier this month. Yet, it was somewhat unusual to see Union Minister for Finance, Arun Jaitley, rather than his colleague in Rural Development, Rao Birender Singh, holding centre stage at the release event in New Delhi. This is enough of a clue about what the census is going to be used for.

The SECC has its origins, first, in the widespread dissatisfaction with the third below the poverty line (BPL) Census of 2002 and, then, with the former United Progressive Alliance government’s decision in 2011 to carry out a caste census, in a less than serious manner. With many central and state government programmes directed at the BP Lpopulation, surveys were periodically carried out by the states under direction from the Ministry of Rural Development to identify the potential beneficiaries of the schemes. The problem with the BPL surveys was that they had substantial errors of exclusion and inclusion (those who should have been identified as BPL were excluded and those who were not BPL were included, respectively). A more transparent criteria-based approach formed the basis for the 2011 SECC. Households which did not meet even one of the 14 criteria covering ownership of assets (a three/four wheeler, refrigerator, etc), regular employment (working in the government) and income (a household member paying income tax, etc) would be considered deprived. In addition, certain kinds of households—all manual scavengers, all ragpickers, etc—would automatically be considered as suffering extreme deprivation.

The new approach made more sense and the initial results available for rural India do confirm the continuing incidence of extreme deprivation; its most striking expression is that the income of the highest earning member in 75% of households is less than Rs 5,000 a month. Yet, none of the data tell us anything new unless we had been carried away by a mobile density of 90 per 100 persons as being an indicator of a very low overall level of deprivation. The information that has been thrown up by the 2011 SECC on the overall degree of deprivation is to be found in different forms in the National Sample Survey, Census of India and even in the, somewhat dated, National Family Health Survey.

If yet there is some excitement in the centre about the SECC it is because of what the government thinks it can do with the data. The 39% of the rural population identified as being deprived because it does not meet even one of the 14 criteria covered in the SECC is much lower than the 75% of the population that is to be covered under the National Food Security Act (NFSA). Could the central government then be thinking of cutting back on its food security obligations by restricting NFSA coverage to 40% of the population? The finance ministry may be attracted by that possibility but that would require the NFSA to be amended and the state governments to agree. The finance ministry may also feel that the availability of information categorising the entire population according to different kinds of deprivation would make a shift to cash transfers—as many in the government want to—much easier. Others see this as “big data” which can be used to track the population’s characteristics.

All this presupposes that the mass of information that has been collected is accurate and that the data has been validated. The initial analyses of the rural data throw up some anomalies. News reports point out, for instance, that according to the survey the incidence of ownership among households in New Delhi of fishing boats plying the Yamuna waters is higher than along Tamil Nadu’s long coastline. With all the data for all the districts yet to be compiled and the methodology of compilation yet to be examined, the validity of the 39% number as deprived cannot be assumed to be accurate. The finance ministry is therefore better advised to leave it to the rural development ministry to first put together the final results of the SECC for rural and also for urban India.

Caste is the other set of data which is yet to be released. We are now told that the Niti Aayog will compile and put out the information. Census information on caste should have been canvassed by the agency with the best skills for the purpose— the Office of the Registrar General and Census Commissioner, India (ORGI). However, the ORGI baulked at collecting this information as part of the Census of 2011. The government of the time then decided to conduct a separate caste census but in the end tagged it along to the rural development ministry’s socio-economic survey, which was conducted by individual state governments. It has been pointed out by a former census commissioner himself that a census on the complex issue of caste identity is not one to be tossed about from agency to agency. The caste data when it is finally put out may show up even bigger weaknesses of the 2011 SECC.

In the end, the SECC will turn out to be most useful only if the socio-economic component of the data is used for the specific purposes for which it was collected. The Indira Awaas Yojana could, for instance, cover only households living in one room or kutcha houses as identified in the SECC. It would be a case of overreach if the finance ministry sees the SECC as providing it an opportunity to reduce coverage and slash welfare expenditure.

Let us now make more food in India

PULAPRE BALAKRISHNAN

Prime Minister Narendra Modi’s exhortation ‘Make in India’ would make perfect sense till we realise that by ‘making’ he means manufacturing. But could it be that his focus on manufacturing may come a cropper if we do not ensure that agriculture is placed permanently on a sound footing? The history of the great manufacturing nations that the PM has been visiting suggests that. So does recent experience here.

It would, of course, be politically correct to speak of the importance of agriculture at this point when farmer suicides have been in the news. Actually, though, the economy has been signalling for some time that all is not well with the sector. Note that I say ‘economy’, and am therefore not referring to agriculture alone. The performance of agriculture has an implication for a population wider than that contained by it. At least for five years, food price increases have driven economy-wide inflation.

That food-price inflation has persisted suggests that a structural factor is likely at work. The market mechanism can in principle eliminate inflationary pressure emanating from shortage by encouraging the expansion of the sector now made attractive by the increased profitability. That this is not happening with respect to India’s food sector points to structural impediments in place, ones the market cannot eliminate.

Food for thought

Food-price inflation has consequences for more than just economy-wide inflation. It can even impact the part of the economy close to our PM’s heart, manufacturing. This is evident from the reports that while inflation is at a four-month low, the index of industrial production is at a five-month low.

There is a plausible explanation for this. Food price inflation can crowd-out household expenditure on manufactures, leading to declining investment and thus demand for capital goods. Higher inflation also leads to real exchange-rate appreciation, rendering exports uncompetitive. So in many ways, a vibrant manufacturing sector requires a sound agricultural base.

The agrarian crisis in the country partly reflects the structural element in the problem of expanding agricultural production. It has two implications for economic policy.

The first is the message that if the production conditions are the constraint, then, trying to tackle the agrarian crisis by raising procurement price — as has been proposed — is tantamount to no more than feeding inflation.

The UPA 2 had discovered this fact the hard way. Apart from the fact that support prices are mostly confined to cereals, and the price rise is happening elsewhere, producers in India’s non-agricultural sector are not going to be mere spectators in the reduction in their real income. They constitute 80 per cent of the economy, and are likely to raise the price of their outputs to compensate for its reduction.

Now, not only is the original rise in the procurement price generalised across the economy, but also it will connect the inflation rate over time. For, the price would have to be raised again in the next round to restore parity with non-agricultural prices.

Thus, trying to shift the advantage towards the farmers by raising support prices cannot normally succeed.

To both improve the lot of farmers, and for the rest of the economy to reap the benefits of such a move, the yield of land must be raised continuously. This would require non-price interventions. Modi cannot be ignorant of these as they constitute what must count as governance, and he had promised to maximise it.

So, what are the areas within agriculture that require better governance? First and foremost, there is irrigation. Secondly, there is the issue of land policy. 

Watering land

Expanding irrigation has been the bugbear of governments in India. While estimates vary, we know for sure that the share of irrigated land in total cropped area is low. Increasing this share is vital as assured availability of water can overcome some of the disadvantages of small farm size.

Some years ago, the Economic Advisory Council to the PM noted that though the average holding size in much of East Asia was smaller than that in India, the share of irrigated land was much higher in the former. This accounts for the fact that these economies enjoy far greater food security that India does, and must have some bearing on their being world-class manufacturing nations.

However, while the slow growth of irrigated area may be a cause of the tardy expansion of food production in India, it has less to do with funding than with governance. In a study published by the RBI in 2008, Ramesh Golait, Pankaj Kumar and I showed that public expenditure on irrigation and flood control had gone up by over 100 per cent in real terms since 1991, with precious little to show for it on the ground. Low spending cannot account for the glacial spread of irrigation capacity in the country.

To see public expenditure on irrigation fructify, we would need governance encompassing conception, construction, supply and maintenance. It is not clear that farmers are part of the process right now, even as it would be wise to include them, for as potential users they have a stake in the success of the project.

Politicians tend to showcase high expenditure on irrigation, and have succeeded in turning such expenditure into a sacred cow so that querying outcomes is to be “anti-farmer”.

Land issues

The pressure of population has led to fragmentation of many farms to a level below economic size. Sizeable investment is now made difficult.

Further, at low output levels, any adverse fluctuation drives the farmer into poverty and debt, from which recovery is impossible without assistance.

There is a strong case for the prevention of further fragmentation of land by appropriate legislation. At the same time, legislation must also allow for tenancy, which is illegal in many parts of India.

In fact, the State should facilitate tenancy on reasonable terms so that necessary yield increase is not held back due to the uneconomic size of land.

Another issue is the alienation of agricultural land. There is a strong case for disallowing the conversion of farmland except in the rarest of rare cases. In fact, the proposed Social Impact Assessment is perhaps too narrowly conceived. It tends to privilege the rights of those deriving a livelihood from the land in question.

Actually, there is the question of the greater common good, from which point of view food security for the nation as a whole emerges as salient. Given the imponderables, especially due to climate change and the fact that grain production per capita is far lower here than in the developed world, an embargo on conversion, whether undertaken by government or owners, makes much sense.

While there is no need for Modi to put his enthusiasm for manufacturing on hold, he should seriously and urgently address the long-term prospects for our agriculture.

The writer is professor of economics at Ashoka University

Food insecurity and statistical fog

Jean Dreze

The implementation of the National Food Security Act is mired in apathy and confusion. A grave injustice is being done to millions of people who live on the margin of subsistence. It is not too late to remove the roadblocks, but this requires a sense of urgency

An odd silence has surrounded the National Food Security Act (NFSA) in the last few months — as if food insecurity were a thing of the past. It may be recalled that the Bharatiya Janata Party (BJP), far from opposing the Act, vociferously demanded a more comprehensive law when the NFSA was being discussed in Parliament in 2013. In some States, notably Chhattisgarh, the BJP had taken the lead in guaranteeing entitlements that were later included in the Act, and also in showing that the Public Distribution System (PDS) can be reformed.

Step towards food security  
This is unfortunate because the nutrition situation in India remains critical. Very few countries if any, had higher levels of child undernourishment in 2005-6, the last time India collected reliable nutrition statistics at the national level (under the third National Family Health Survey). What happened since then is hard to tell. Some surveys, including a government-sponsored UNICEF survey, suggest significant improvement. Others, notably the second India Human Development Survey, point to very limited progress. This statistical fog, largely due to the failure of the fourth National Family Health Survey, does not help matters. What is clear is that even if substantial progress took place since 2005-6, undernutrition levels in India remain higher than almost anywhere else in the world.

It is no one’s claim that the NFSA is an adequate answer to this problem. The Act has serious flaws, and leaves out some important requirements of good nutrition (e.g. sanitation). Still, effective implementation of NFSA would make an important contribution to food security and improved nutrition. Recent experience shows that a well-functioning PDS makes a big difference to people who live on the margin of subsistence. The Act is also an opportunity to strengthen valuable child nutrition programmes such as school meals and the Integrated Child Development Services.

Central and State governments are jointly responsible for the tardy implementation of the Act. In some respects, the blame clearly lies with the Central government. For instance, ever since July 2013, all Indian women have been entitled to maternity benefits of Rs.6,000 per month under NFSA. It is the Central government’s responsibility to design a scheme for this purpose and to fund it. Yet, this critical provision of the Act does not seem to figure in discussions of the forthcoming Budget. 

A new PDS
In other respects, the State governments also have much to answer for. This applies in particular to food entitlements under the PDS. The Act provides for the PDS to cover 75 per cent of the rural population and 50 per cent of the urban population at the national level — the corresponding ratios are higher in the poorer States and lower in better-off States. Every eligible household is entitled to 5 kg of foodgrain per person per month at a nominal price (Rs.3, Rs.2 and Rs.1 per kg for rice, wheat and millets respectively). This would mean that the PDS takes care of about half of the foodgrain consumption of eligible households.

This “new PDS” does not require any increase in public procurement of foodgrains, beyond the levels achieved in recent years. It is mainly a restructuring of the system, with broader coverage, lower issue prices and clear entitlements. Recent experience shows that these steps, along with bold PDS reforms, can lead to drastic improvements in the system. This experience is not confined to leader States like Tamil Nadu or Chhattisgarh, but now extends to some lame-duck States as well, e.g. Odisha. Even Bihar, one of the worst-governed States, has achieved remarkable PDS improvements in recent years.

The NFSA is an opportunity to consolidate these achievements and extend them across the country. The main stumbling block is the identification of eligible households. When the Act was being drafted, it was assumed that the identification process would be based on the Socio Economic and Caste Census (SECC). The idea was to use simple and transparent “exclusion criteria” (e.g. having a permanent government job or owning a motorised vehicle) to weed out relatively well-off households — everyone else would be eligible. SECC is the best available database for this purpose. 

The SECC saga
Alas, the release of SECC data has been excruciatingly slow. According to the official SECC website, a “draft list” has been released for about three fourths of India’s districts. However, data are missing for at least some districts in half of India’s major States. Where a draft list has been released, a “final list” is supposed to be prepared after giving every household an opportunity to appeal for corrections — this could take a long time. Meanwhile, for better or worse, some States have gone ahead and issued ration cards based on the draft SECC list.

Aside from the delay, there are other shortcomings in the SECC process. Even in districts for which data have been released, the draft list has important gaps. Also, it is displayed in an odd format (pdf) that does not lend itself to computer searches or tabulations. This is an embarrassing muddle, considering that the Central government spent some Rs.5,000 crore on this exercise.

In the absence of SECC data, some States have resorted to shortcuts such as expanding the old “BPL list”, instead of preparing a new list of eligible households. These shortcuts tend to be fraught with problems. The BPL lists, often as old as 2002 or even 1997, are highly unreliable. In some States, a well-defined BPL list does not even exist — there are different lists in different places (e.g. on the net, at the district level, and at the gram panchayat level), inconsistent with each other. The SECC approach is an opportunity to clean this mess and prepare a single, transparent, logical, digitised list of eligible households.

Bihar’s recent experience shows the benefits of using SECC data to identify eligible households, based on the exclusion approach. The outdated, elusive and often arbitrary BPL list has been replaced with a far more reliable list, transparently linked to SECC data that are available online. Since the SECC’s household listing corresponds to the 2011 population census, the coverage of SECC data is close to universal. There are, of course, inaccuracies in the SECC data, but judging from a recent survey of 1,000 households in four districts of Bihar, the errors are rarely such as to exclude a household that would otherwise be eligible under NFSA. The main shortcoming of the Bihar process, as things stand, is that the list of eligible households is yet to be placed in the public domain. Nevertheless, this approach is a real breakthrough compared with the BPL census. West Bengal is now following a similar approach. 

Committee recommendations
Many other States, however, are unable or unwilling to follow this lead due to delays or gaps in the SECC data. Rajasthan, the first State to implement NFSA, made a mess by relying on an extension of the BPL list to identify eligible households. Odisha, frustrated with the delays, embarked on an entirely separate identification process based on self-declaration — a very risky venture. Jharkhand, lagging behind in these matters, has not moved beyond a series of vacuous announcements.

Just to add to the confusion, the recent report of the Shanta Kumar committee recommends a reduction of the coverage of NFSA from 67 per cent to 40 per cent of the population. How this is supposed to be done, halfway through the implementation of the Act, the report does not explain. Aside from threatening to cause havoc in States that are already implementing the Act, the report has created crippling uncertainties for other States. How is, say, Jharkhand supposed to follow Bihar’s lead if there is a possibility of the expansion of PDS coverage being rolled back any time?

On a more positive note, PDS reforms have made remarkable progress in many States — even Jharkhand — as they prepared for the Food Security Act. It would take little to remove the roadblocks, starting with the release of SECC data, and ensure that the Act serves its purpose. This process, however, requires a sense of urgency that is wholly lacking as things stand.

(Jean Dreze is Professor at the Dept. of Economics, Ranchi University.)

End-to-end solutions for food supply

Charan Singh,Padmakumar Nair and Shamil M

The Government has set up the Expenditure Management Commission to rationalise subsidies, among other expenditure items in India. India incurs nearly one per cent of food subsidy annually, generally utilised under the existing public distribution system (PDS) consisting of Food Corporation of India (FCI) and nearly five lakh Fair Price Shops (FPSs). The public distribution system has been the object of criticism for inefficiency; it is vulnerable to misappropriation, resulting in large-scale losses to the Government. According to some estimates, nearly 40 per cent of foodgrains are lost annually under the PDS.

The price differential that exists between the market price and the subsidised prices of PDS items is believed to be the main reason why this arbitrage opportunity is exploited. The last mile delivery mechanism, involving the owner of the fair price shop, is most vulnerable to the price differential.

Diverting stocks

Various schemes experimented with in different States such as strengthening of monitoring systems initiated by village-level vigilance committees, GPS/GPRS-based tracking of PDS vehicles, use of IT-based centralised solutions to match and monitor the delivery process and make the existing system more efficient, neglect the inherent inefficiencies present in the PDS system due to the price differential.

In all these instances, fair price shopowners have an incentive to divert the PDS grains to the open market, either by misrepresenting the quota available to the end consumers or by offering small cash incentives to the end consumer for forgoing foodgrain requirements.

A major feature of the PDS is the general lack of accountability down the entire supply chain, leaving the leakages that occur at different points completely unaccounted for. Typically, in the case of the distribution network of any fast moving consumer goods of any private sector company, precise accountability is defined at every stage, where the loss or diversion of any product is directly attributed to the immediate possessor.

The supply chain

While it is hard to propose a precisely similar system for PDS, largely because of government ownership and the distribution mechanism, it may be possible to draw some parallels between these two systems to gain some meaningful insights.

The use of technology can help plug the leak in the supply chain of the public distribution system and ensure that at each stage in the PDS supply chain, full market price is paid to the immediately previous stage on acquiring foodgrains. This practice imposes on the supervisors of any stage, ownership and accountability to store and transfer the foodgrains to the next stage.

At the godowns of the FCI, which are government-owned and operated entities, the supervisor's salary incentives would be tied to the losses incurred at the respective godowns. At the fair price shop, which is the end consumer interface, this system tries to tackle the issue of price differential by selling the foodgrains to the end consumers at the subsidised prices; the Government/FCI credits the price differential into the fair price shopowners’ bank accounts once the food is delivered to the target population. This system tries to incorporate the benefits of cash transfer except that fair price shopowners are required to have bank accounts; it avoids the need for bank accounts for every end consumer.

Bringing in bio-metric smart cards on the demand side can help track the foodgrains to be distributed right up to the end consumer. The Aadhar card can be meaningfully used for validating the identity of the consumer.

Managing transportation

While this system clearly defines accountability, transportation management and reconciliation of the payment system can become challenging. To address this issue, efficient implementation of a centralised IT infrastructure (CITF) can be useful.

The centralised system can make use of tracking devices such as the Radio Frequency Identification Number (RFID) on each sack of foodgrain which records the time of delivery/acceptance and the number of sacks delivered at every PDS point, resulting in efficient inventory management. While a GPS system, being experimented with in some States, simply tracks the vehicle, the centralised system goes all the way up to the sack level to ensure delivery.

This type of dynamic tracking helps link inventory management with the payment system so that all such information is stored and accessible at a centralised location. The RFID-CITF system could help prevent possible malpractices such as diversion of the foodgrain while wrongly registering the acceptance of foodgrain by just delivering the RFID tag (and not the actual goods).

In other words, the responsibility of ensuring the receipt of goods in right quantities can be fully attributed to the receiving warehouse or fair price shop through the payment mechanism discussed above. RFID-based tracking ensures time and quantity information, which could help in quantity reconciliation at fair price shop level.

The scheme discussed in this article faces challenges with respect to last mile connectivity in remote villages, in terms of power availability, connectivity and so on. A phased introduction of this scheme starting from already IT-enabled fair price shops down to those in remote villages will surely help in effectively plugging leakages in the public distribution system.

(Singh is RBI Chair Professor of economics at IIM-Bangalore. Nair and Shamil are students)