I wanted to tie up all my blogs in the social sector context into one common thread underlying in all of them: poverty and its alleviation. The magnitude of the problem (about 1.7 billion people are estimated to live in absolute poverty) makes it possibly the biggest issue that we as a race face today.
Poverty is about access to potable water, healthcare, education, financial services and housing among many other things. Anyone that is unable to afford any of these is deemed to be in poverty. Also these effects are at the same time the very causes themselves making the cycle a vicious one. Economic growth/increased levels in industrialization & subsequently productivity/modernizing in agriculture are all considered to be at the core of poverty alleviation solutions. Agriculture especially is very important given that the largest block of those in poverty belong to this sector.
Here is a brief snapshot on the more recent history of poverty. Most people in Western Europe were living in poverty until even the 18th century. Then the Industrial revolution happened. Living standards were of course still abysmal (due to low wages) during this period but soon wealth creation and economic progress made items more accessible to many who were otherwise too poor to have afforded them. The story in the USA is similar as well. Rapid progresses in the early 20th century made the US the world’s leading industrial power.
Higher productivity may not be the solution applicable to all scenarios. There might be sudden rises in the costs of living and supply side problems. This is especially true in the case of food prices where a drought or a water crisis negates the positive effect of higher wages. We have seen food riots in demonstrations in the recent years in countries such as Mexico, Yemen and even Italy. Agricultural land is also degrading very quickly and this is adding to food scarcity.
The poor have little or no access to proper healthcare. It is also a well established fact that overpopulation and poverty go hand in hand. The poor have low education levels and therefore have little understanding on birth control planning. Poor nutrition levels in childhood are a big reason to brain development. Statistics here are very dismal (1.02 billion go to bed hungry every night) and I will not cite anymore in this area and make it any depressing than it already is. Education and healthcare are also much related. Those with access to low healthcare tend to suffer many absences at school. The poor therefore are at higher risk of completing their education and consequently this segment faces a higher dropout ratio.
There are other obstacles to development and one of the often cited reasons is the availability of land rights to the poor. While agricultural land may rightfully be the asset of the farmer tilling it, there is no documentation that supports this claim. Therefore this becomes completely dead capital in the hand of the farmer and consequently she/he cannot treat this as an asset as other business might have been able to do. Wars and drugs are another reason. Conflicts in Africa are a prime example, where investors have little confidence in investing their resources. Corruption is another issue. India before liberalization had its infamous license-raj regime where businesses had to bribe the government before it could obtain a license on starting a business. Corruption often affects the small and medium enterprises, which create the most jobs, more than the large corporations.
Economic liberalization is therefore a good thing. It increases the surplus of trading nations. In fact, African nations have often been asking for the lowering of import trade duties in lieu of complete aid withdrawal to their countries. Also free markets with lesser government intervention have seen to be an effective mechanism to treat corruption.
Improvements in healthcare, education and the providing of financial services do not require massive investing. Technology here can play the part of a major disrupter. Telemedicine, cheap water filters and effective mass campaign targeting on health and hygiene are not as expensive to do. Mobile banking and innovating microfinance models can help with enabling the providing of financial services. Good infrastructure though needs substantial investment and private parties here are more than willing to build roads and information networks thereby enabling market reforms.
Income grants and financial aid is one of the most common forms of aid. Debt relief is another. However aid needs to audited carefully and the impact measured. The Gates Foundation spend about 10% of their allocation is measuring impact alone. Another criticism of aid is that the donor influences behavior resulting in undesirable side-effects and consequences.
To summarize, I think that a mix of economic liberalization, usage of technology, investing in infrastructure and continuing use of income grants and financial aid with focus on impact measurement are some of the most effective ways of poverty alleviation. I have not spoken of social entrepreneurship really here as a solution as I think that it won’t do enough to help the situation and secondly, most successful models of social entrepreneurship are quite local and very difficult to replicate on a global or even a national scale.
Sunday, July 4, 2010
Sunday, June 13, 2010
Financial Inclusion, Microfinance and New Models
Financial inclusion means delivering financial services at affordable rates to those in the low income groups. By financial services we broadly mean the following: savings, credit and insurance. And for all of this to be effective, there must be multiple providers of such services so that customers can choose from various alternatives. It is assumed that competition will bring down rates and also that it will ensure some level of industry performance standards.
In India, steps towards achieving financial inclusion were kicked off in 2004/5 when RBI urged banks to provide a no-frills banking account to customers. General credit cards were issued to the poor and Know Your Customer (KYC) norms were relaxed for those with annual deposits of lesser than INR 50000. Then in 2006, RBI allowed microfinance institutions and NGOs/SHGs as financial intermediaries. Since then Kerala, Pondicherry and Himachal Pradesh have announced a 100% financial inclusion.
Despite all measures, given that the magnitude of the problem is huge in India, it is estimated that 60% of the population still don’t have bank accounts and about 90% don’t get loans. Also only 10% have life insurance of some sort while only a 0.6% has non-life insurance cover. Primarily the following persons are financially excluded: marginal farmers, landless laborers, those in the self employed & un-organized sector enterprises, urban slum dwellers, ethnic minorities, socially excluded groups and women.
The biggest hurdles to achieving financial inclusion are the lack of legal identity required for accessing financial services, lack of basic literacy that prevents the customer from even opening an account (and to add to it sometimes rather complicated procedures) and most importantly lack of available branches/offices in the area that customers reside in. Most commercial banks operate only in commercially profitable areas and they set up offices only in those areas. Traveling to a far off location often means a day’s wage loss and there is also the added cost of travel.
Currently in the absence of a formal financial institution, most people have to depend on the local moneylender. Studies have shown money-lending rates across Asia, Latin America and Africa to be in the ranges of over 10% monthly for 76% of the sample size and over 100% per month for 22% of the sample size. Even though these rates are high, their services are convenient, quick and flexible (especially when borrowers run into problems) and they thrive even in places where microfinance institutions exist.
Microfinance had been touted as a solution that will help bring people out of poverty and ensure financial inclusion. Among the poor, empirical evidence goes on to show that those involving themselves in microfinance programs were able to improve their welfare both at the household and individual level much more than those who did not. One particular statistic declares that over 55% of Grameen borrower households were “no longer poor” as compared to 18% of non-borrower households.
The highest concentration of microfinance accounts are in India globally (consider postal savings state agricultural and development banks, financial cooperatives and credit unions and specialized rural banks as institutions practicing microfinance as well). In fact in Andhra Pradesh alone, microfinance penetration is rural areas is around 800%.
However microfinance is not without its share of criticism and troubles. For one, the rates of interest being charged are close to around 25% annually and this is in fact much more than 15% above the long-term operating costs that these institutions incur. Regulation is poor in this sector and a considerable percentage of the money that donors give is not channelized effectively. Microfinance loans are also given to those to enhance existing business and not help start new ones. In other cases, the borrowers become forced wage laborers selling crafts or agricultural produce through organizations controlled by the MFI. Even though MFIs claim high repayment rates, it is interesting to see that most of the clients are repeat customers that have become dependent on such borrowing (in fact the 800% can easily be interpreted as a debt trap).
There are some interesting models that are evolving. SHGs have been known to work where members collect money and create a group fund. Local banks then lend against the corpus raised in the group fund. There are also Internet-based organizations today that have platforms which facilitate peer-to-peer lending where a loan is disbursed as the aggregation of a number of smaller loans at often negligible interest rates instead of being made in the form of a single, direct loan. Zidisha, Lend for Peace, Kiva and the Microloan Foundation are all proponents of such a model. United Prosperity has a rather unusual model wherein it provides a guarantee to a local bank which then lends back double that amount to the interested borrower. Per this the micro-entrepreneur also develops a credit history with their local bank for future loans.
In India, steps towards achieving financial inclusion were kicked off in 2004/5 when RBI urged banks to provide a no-frills banking account to customers. General credit cards were issued to the poor and Know Your Customer (KYC) norms were relaxed for those with annual deposits of lesser than INR 50000. Then in 2006, RBI allowed microfinance institutions and NGOs/SHGs as financial intermediaries. Since then Kerala, Pondicherry and Himachal Pradesh have announced a 100% financial inclusion.
Despite all measures, given that the magnitude of the problem is huge in India, it is estimated that 60% of the population still don’t have bank accounts and about 90% don’t get loans. Also only 10% have life insurance of some sort while only a 0.6% has non-life insurance cover. Primarily the following persons are financially excluded: marginal farmers, landless laborers, those in the self employed & un-organized sector enterprises, urban slum dwellers, ethnic minorities, socially excluded groups and women.
The biggest hurdles to achieving financial inclusion are the lack of legal identity required for accessing financial services, lack of basic literacy that prevents the customer from even opening an account (and to add to it sometimes rather complicated procedures) and most importantly lack of available branches/offices in the area that customers reside in. Most commercial banks operate only in commercially profitable areas and they set up offices only in those areas. Traveling to a far off location often means a day’s wage loss and there is also the added cost of travel.
Currently in the absence of a formal financial institution, most people have to depend on the local moneylender. Studies have shown money-lending rates across Asia, Latin America and Africa to be in the ranges of over 10% monthly for 76% of the sample size and over 100% per month for 22% of the sample size. Even though these rates are high, their services are convenient, quick and flexible (especially when borrowers run into problems) and they thrive even in places where microfinance institutions exist.
Microfinance had been touted as a solution that will help bring people out of poverty and ensure financial inclusion. Among the poor, empirical evidence goes on to show that those involving themselves in microfinance programs were able to improve their welfare both at the household and individual level much more than those who did not. One particular statistic declares that over 55% of Grameen borrower households were “no longer poor” as compared to 18% of non-borrower households.
The highest concentration of microfinance accounts are in India globally (consider postal savings state agricultural and development banks, financial cooperatives and credit unions and specialized rural banks as institutions practicing microfinance as well). In fact in Andhra Pradesh alone, microfinance penetration is rural areas is around 800%.
However microfinance is not without its share of criticism and troubles. For one, the rates of interest being charged are close to around 25% annually and this is in fact much more than 15% above the long-term operating costs that these institutions incur. Regulation is poor in this sector and a considerable percentage of the money that donors give is not channelized effectively. Microfinance loans are also given to those to enhance existing business and not help start new ones. In other cases, the borrowers become forced wage laborers selling crafts or agricultural produce through organizations controlled by the MFI. Even though MFIs claim high repayment rates, it is interesting to see that most of the clients are repeat customers that have become dependent on such borrowing (in fact the 800% can easily be interpreted as a debt trap).
There are some interesting models that are evolving. SHGs have been known to work where members collect money and create a group fund. Local banks then lend against the corpus raised in the group fund. There are also Internet-based organizations today that have platforms which facilitate peer-to-peer lending where a loan is disbursed as the aggregation of a number of smaller loans at often negligible interest rates instead of being made in the form of a single, direct loan. Zidisha, Lend for Peace, Kiva and the Microloan Foundation are all proponents of such a model. United Prosperity has a rather unusual model wherein it provides a guarantee to a local bank which then lends back double that amount to the interested borrower. Per this the micro-entrepreneur also develops a credit history with their local bank for future loans.
Saturday, June 5, 2010
Fixing Rural Healthcare In India
The Indian healthcare market is close to about USD 50 billion today and is expected to grow to USD 70 billion in another two years time. Changing demographics, rising income levels (& consequently shifts from chronic to lifestyle diseases) and medical tourism is driving the boom in this industry. There also has been a huge increase in insurance companies issuing medical insurance policies (it is still estimated that 75% of the healthcare costs in India are borne by the consumer directly).
There is still a huge shortage of adequate healthcare in rural India and India definitely needs a lot of investment in this sector. The number of beds per 1000 population is at a 0.7 against a global average of almost 4. There is a serious shortage of staff and doctors and a good number of them of them go abroad every year. Government infrastructure is defunct in most areas. Often, there are no doctors, staff or even medicines available, the infrastructure is inadequate and the hospitals/health-centers are poorly located resulting in a lot of patient travel. Private hospitals that provide better healthcare are either too expensive or much too far away for the typical villager.
But will having enough doctors and adequate infrastructure solve the problem completely? Well, for one, we know for sure that we need have this is in place at a minimum. However, there are other real issues here. Firstly, there needs to be a lot of private participation in the healthcare sector. Government by itself cannot solve the problem as the scale of the problem is massive and the government doesn’t seem to get the incentive structure of the staff and doctors right. Secondly, the private hospitals will need to charge at rates that are affordable & yet not make losses and so they will have to get their pricing right. When some markets may not be viable to the private sector at all, public private partnerships may make more sense. Thirdly and more importantly, the staff will have to be such that they feel a sense of ownership in being associated with the healthcare center and therefore more local people will have to be trained and deployed accordingly. There is little point in forcing a doctor/staff to travel 4 hours to and fro to work at a rural center every day. It is simply un-sustainable. You also don’t need high skilled doctors to serve at a rural center that will cater to mostly primary healthcare. For this one can have medical school undergraduates (tie-up with city colleges for an assured steam of junior doctors). And as far as the staff is concerned, employ, train and deploy locally.
Uttarakhand has devised a system that seems to be working well. They have trained the local women and assigned them to villages in their districts. These women bond well with other women in the village and serve as the first point of contact in the healthcare system. They arrange for local transport in case of emergencies and ferry patients across to the health centers. They also act as enforcers and in case of errant hospital staff, have the authority to directly complain to higher developmental authorities. Maternity mortality rates especially have gone down rather sharply as a consequence over the last few years.
There is still a huge shortage of adequate healthcare in rural India and India definitely needs a lot of investment in this sector. The number of beds per 1000 population is at a 0.7 against a global average of almost 4. There is a serious shortage of staff and doctors and a good number of them of them go abroad every year. Government infrastructure is defunct in most areas. Often, there are no doctors, staff or even medicines available, the infrastructure is inadequate and the hospitals/health-centers are poorly located resulting in a lot of patient travel. Private hospitals that provide better healthcare are either too expensive or much too far away for the typical villager.
But will having enough doctors and adequate infrastructure solve the problem completely? Well, for one, we know for sure that we need have this is in place at a minimum. However, there are other real issues here. Firstly, there needs to be a lot of private participation in the healthcare sector. Government by itself cannot solve the problem as the scale of the problem is massive and the government doesn’t seem to get the incentive structure of the staff and doctors right. Secondly, the private hospitals will need to charge at rates that are affordable & yet not make losses and so they will have to get their pricing right. When some markets may not be viable to the private sector at all, public private partnerships may make more sense. Thirdly and more importantly, the staff will have to be such that they feel a sense of ownership in being associated with the healthcare center and therefore more local people will have to be trained and deployed accordingly. There is little point in forcing a doctor/staff to travel 4 hours to and fro to work at a rural center every day. It is simply un-sustainable. You also don’t need high skilled doctors to serve at a rural center that will cater to mostly primary healthcare. For this one can have medical school undergraduates (tie-up with city colleges for an assured steam of junior doctors). And as far as the staff is concerned, employ, train and deploy locally.
Uttarakhand has devised a system that seems to be working well. They have trained the local women and assigned them to villages in their districts. These women bond well with other women in the village and serve as the first point of contact in the healthcare system. They arrange for local transport in case of emergencies and ferry patients across to the health centers. They also act as enforcers and in case of errant hospital staff, have the authority to directly complain to higher developmental authorities. Maternity mortality rates especially have gone down rather sharply as a consequence over the last few years.
Sunday, May 23, 2010
Global Warming! Really?
Global warming today is being projected as an apocalyptic event and its outcome even being compared to the fallout of a global war. However, there is considerable evidence that there is little truth in the hypothesis that the planet is undergoing any significant climate change. In fact, in the 1970s we were more worried about global cooling and the coming of an ice age more than anything.
The argument for global warming rests on the following premises:
1. Factual evidence that both temperatures and sea levels have been rising consistently
2. Carbon dioxide is the primary contributor towards global warming and that increased levels contribute to increased temperatures
3. Climate models on which the premise of these arguments rest upon
There is no concrete evidence today that global temperatures have been rising consistently. In fact the opposite is actually true: temperatures have been declining. An important factor here is the time period over which these measurements are made. Obviously, if we are talking about a global effect of such huge consequence, then our time period should be much more just 50 years. Over the last 200 years, there are periods over which average temperatures have gone up and there are other periods when the opposite has happened. The way we measure temperatures aren’t also the best ways to go about it. Most measuring stations are near airports and almost all of them are in towns and therefore the likelihood of temperature readings being on the higher side is higher. And secondly measuring increase in sea levels anywhere close to accurately is almost impossible. Even if thinning of the ice poles is happening today, there is no credible evidence whatsoever that we are from any danger of it (except for low lying areas like the Maldives which is of course an area of concern).
Also carbon dioxide is not the primary contributor towards global warming. Gases like methane are. In fact, by a common measure methane is 25 times more potent as a contributor than the carbon dioxide released by cars. It is estimated that the planets ruminants are responsible for about 50% more greenhouse gas than the entire transportation sector today. There is also no concrete evidence that increased levels of carbon dioxide contributes to higher temperatures. In fact, increased carbon dioxide may actually be a good thing. In an experiment conducted, two identical saplings were grown in identical environments with only one difference. While one sapling was given the normal amount of carbon dioxide, the other sapling was given twice that amount. After a span of time it was observed the sapling that received higher levels of carbon dioxide had grown 183% of its counterpart!
Climate models on which the premise of the global warming argument rests upon are hopelessly inadequate. In fact the science is very complex and something as important as cloud formation has not been given enough importance. Therefore models today don’t hold a lot of ground.
A volcanic eruption at Mount Pinatubo released so much sulphur dioxide into the atmosphere that it actual led to global drops in temperature and even so, our planet can solve the problem via a few volcanic eruptions. If we don’t want to leave it to Mother Nature, then we can simulate some of this ourselves and this is called geo-engineering. Of course, today there is much controversy in this area (no country can unilaterally inject something into the atmosphere that may affect the climate in some other country) and there is a lot of consensus building that will need to be done.
We should be worried more about deforestation than global warming as this is a serious problem with very real and evident consequences. This causes extinction, real changes to climatic conditions (erosion, flooding & landslides), desertification and displacement of indigenous people. It has been estimated that about half of the Earth's mature tropical forests that until 1947 covered the planet are now gone. Up to 90% of West Africa's coastal rainforests have been lost since 1900 and in South Asia about 88% of the rainforests have disappeared. Much of what remains of the world's rainforests is in the Amazon basin today and the Amazon Rainforest covers approximately 4 million square kilometers. However I will perhaps leave this topic for another blog.
I am not going to point fingers at anyone or any organization that most others hold responsible for fears on global warming. However, it is a good question to ask is
who profits from this the most? Who benefits most from carbon trading? Isn’t telling China and India to reduce carbon dioxide emissions putting a brake on their economies and overall growing global influence? Won’t taxation on carbon emission drive up our energy consumption bills? I am not going to answer any of these questions, but I would like to leave the reader with one last thought: there is a conspiracy theory going around today that the 4th world war is already being fought and it has to do with energy. Currently, given that the dominant source of energy is oil and that is primarily found in the Middle East, much of the war is being waged there. Of course, this is only but highly speculative and but possibly a worthwhile thought experiment.
The argument for global warming rests on the following premises:
1. Factual evidence that both temperatures and sea levels have been rising consistently
2. Carbon dioxide is the primary contributor towards global warming and that increased levels contribute to increased temperatures
3. Climate models on which the premise of these arguments rest upon
There is no concrete evidence today that global temperatures have been rising consistently. In fact the opposite is actually true: temperatures have been declining. An important factor here is the time period over which these measurements are made. Obviously, if we are talking about a global effect of such huge consequence, then our time period should be much more just 50 years. Over the last 200 years, there are periods over which average temperatures have gone up and there are other periods when the opposite has happened. The way we measure temperatures aren’t also the best ways to go about it. Most measuring stations are near airports and almost all of them are in towns and therefore the likelihood of temperature readings being on the higher side is higher. And secondly measuring increase in sea levels anywhere close to accurately is almost impossible. Even if thinning of the ice poles is happening today, there is no credible evidence whatsoever that we are from any danger of it (except for low lying areas like the Maldives which is of course an area of concern).
Also carbon dioxide is not the primary contributor towards global warming. Gases like methane are. In fact, by a common measure methane is 25 times more potent as a contributor than the carbon dioxide released by cars. It is estimated that the planets ruminants are responsible for about 50% more greenhouse gas than the entire transportation sector today. There is also no concrete evidence that increased levels of carbon dioxide contributes to higher temperatures. In fact, increased carbon dioxide may actually be a good thing. In an experiment conducted, two identical saplings were grown in identical environments with only one difference. While one sapling was given the normal amount of carbon dioxide, the other sapling was given twice that amount. After a span of time it was observed the sapling that received higher levels of carbon dioxide had grown 183% of its counterpart!
Climate models on which the premise of the global warming argument rests upon are hopelessly inadequate. In fact the science is very complex and something as important as cloud formation has not been given enough importance. Therefore models today don’t hold a lot of ground.
A volcanic eruption at Mount Pinatubo released so much sulphur dioxide into the atmosphere that it actual led to global drops in temperature and even so, our planet can solve the problem via a few volcanic eruptions. If we don’t want to leave it to Mother Nature, then we can simulate some of this ourselves and this is called geo-engineering. Of course, today there is much controversy in this area (no country can unilaterally inject something into the atmosphere that may affect the climate in some other country) and there is a lot of consensus building that will need to be done.
We should be worried more about deforestation than global warming as this is a serious problem with very real and evident consequences. This causes extinction, real changes to climatic conditions (erosion, flooding & landslides), desertification and displacement of indigenous people. It has been estimated that about half of the Earth's mature tropical forests that until 1947 covered the planet are now gone. Up to 90% of West Africa's coastal rainforests have been lost since 1900 and in South Asia about 88% of the rainforests have disappeared. Much of what remains of the world's rainforests is in the Amazon basin today and the Amazon Rainforest covers approximately 4 million square kilometers. However I will perhaps leave this topic for another blog.
I am not going to point fingers at anyone or any organization that most others hold responsible for fears on global warming. However, it is a good question to ask is
who profits from this the most? Who benefits most from carbon trading? Isn’t telling China and India to reduce carbon dioxide emissions putting a brake on their economies and overall growing global influence? Won’t taxation on carbon emission drive up our energy consumption bills? I am not going to answer any of these questions, but I would like to leave the reader with one last thought: there is a conspiracy theory going around today that the 4th world war is already being fought and it has to do with energy. Currently, given that the dominant source of energy is oil and that is primarily found in the Middle East, much of the war is being waged there. Of course, this is only but highly speculative and but possibly a worthwhile thought experiment.
Sunday, May 9, 2010
Water Supply In India
One of the Millennium Development Goals (MDGs) set by the UN has to do with ensuring environmental sustainability. When it comes to providing the public access to safe drinking water in India, estimates shows that about 70% of rural India have no access to safe drinking water. Water availability at Indian cities are pathetic as well and India's capital, Delhi only gets 3 hours of water supply on a daily basis (APAC averages are at 19 hours/day). In urban India, most of the water is lost due to wastages. Per a study by McKinsey and KPMG, water wastage in Bangalore and Delhi are at 50 % and 43 % of total. Mumbai and Chennai fare better at 20% but thats still a lot of water given the quantum of water supply to these cities.
Wastage may have something to do with tariffs. Higher is the cost of my using water, the more careful I will be about not wasting it. Urban water tariffs are very affordable in India. In fact, water tariff that is based on metering doesn't even hold good in most parts as either most meters don't work or simply because meters haven't been installed. The average residential tariff is at about 1.5 Rupees per cubic meter and thats is only about 1/10th of operating & maintenance costs. There are also various challenges faced and political interests often prevent tariffs from being increased even by a small extent although users may be willing to pay more for better services. When its comes to rural areas, cost recovery is low and consequently a majority of the rural water systems are non-functional for lack of maintenance compounding to the water problem.
Various efforts to improve water supply in India have been attempted ranging from community led sanitation projects to private companies & public private partnerships providing water supply. Community led efforts have to do with incorporating the knowledge & opinions of rural people in the planning and management of development projects and water programs. Villages that achieve this status receive monetary rewards and high publicity. However this is not a quick fix intervention and can be very slow, time and energy consuming. Breaking down social & caste barriers, building awareness & strengthening demand and addressing the sometimes messy local political & power inequities are all part of the game.
Privatization definitely has its benefits as well: increased efficiency and better service quality are the most evident. Water supply in Jamshedpur is one of the few cities in India with continuous water supply. Its water system is operated by the private company that is a subsidiary of Tata Steel. However, not every private company operates in the spirit of the Tatas and a regulator may therefore be necessary.
As per the Indian Constitution , water supply and sanitation is a state responsibility and therefore states are responsible for its funding and finances. States then pass on this responsibility to municipalities in urban areas and the Panchayats in rural areas and all of the planning and decision making is extremely centralized. At an advisory capacity level, the responsibility is shared across various ministries. At the central level, the Ministry of Housing and Urban Poverty Alleviation is responsible for urban water supply whereas the Ministry of Rural Development is responsible for rural water.
The lack of a central regulator may well be the biggest hurdle today. Even given that private companies may be given freedom to choose how much to charge for providing water, someone still has to monitor the amount of water drawn, the source of water & its replenishment and the quality of water provided.
Sunday, May 2, 2010
Of Agriculture, Inflation and the Public Distribution System in India
GDP sector composition is broken up into 3 areas primarily: agriculture, industrial and service. Worldwide averages show a clear majority of services contribution to a country's output and then industrial comes second followed by agriculture. In fact, industrial output is the highest contributor only for China in the top 15 countries by GDP. As far as India is concerned, the breakup goes like this: 18% for agriculture, 20% for industrial and 62% for services (by the way contribution from agriculture in US GDP is under 1% and India has the highest percentage contribution in the top 15 countries by GDP by a long way). So if agriculture contributes to only so much of India's GDP, then why it is so significant to India?
It is for many reasons. I will talk about only a few here. Firstly, over 50% of India’s population depends on agriculture for a living and therefore a good monsoon directly impacts all other sectors. India fared better than most nations globally in the recent global economic crisis because it depended lesser on exports and more on internal consumption & spending that was fueled by rural demand. Secondly, the country's population and spending power is growing much faster than its ability to produce food output and this is fueling the supply side inflation that most Indians are a victim of today.
Agricultural productivity in India is at very poor levels. Irrigation facilities are abysmal and the country is extremely dependent on a good monsoon. Hardly any modern techniques and practices are used anywhere and the fact that the average size of land holdings is very small makes it extremely expensive to employ modern agricultural technologies. Government policy is inconsistent and subsidized electric power is leading to over-pumping and drop in water table levels. Of course, a lot of progress has been made since freedom, but it has been extremely slow. The Green Revolution (post 1965) ensured that widespread famine in India became history (though today it is blamed for land degradation).
The Indian government in its attempt to control inflation has banned export of certain commodity food items (though this can be discriminatory to farmers who could have got a better price outside the country). On the consumption side, the government fares terribly. There is a Public Distribution System(PDS) that is meant to provide rationed amounts of basic food items and other non food products at below market prices to consumers through a network of Fair Price Shops all over the country. However, per a Planning Commission study, only about 42% of subsidized grains issued by the Central Pool reach the target group and the PDS is clearly almost ineffective. To put it simply despite the PDS, India accounts for over 400 million poor and hungry people. Also grains and food meant for the poor lie rotting in the India's storages and food release is rather poorly managed.
The actual poverty rate is India is under much debate. Government estimates put it under 30% percent. The Tendulkar committee report puts it at 37% and the World Bank put it around 42%. However, what is important here is that meaningfully perhaps the poor and the vulnerable section is almost 60% of the Indian population.
It is for many reasons. I will talk about only a few here. Firstly, over 50% of India’s population depends on agriculture for a living and therefore a good monsoon directly impacts all other sectors. India fared better than most nations globally in the recent global economic crisis because it depended lesser on exports and more on internal consumption & spending that was fueled by rural demand. Secondly, the country's population and spending power is growing much faster than its ability to produce food output and this is fueling the supply side inflation that most Indians are a victim of today.
Agricultural productivity in India is at very poor levels. Irrigation facilities are abysmal and the country is extremely dependent on a good monsoon. Hardly any modern techniques and practices are used anywhere and the fact that the average size of land holdings is very small makes it extremely expensive to employ modern agricultural technologies. Government policy is inconsistent and subsidized electric power is leading to over-pumping and drop in water table levels. Of course, a lot of progress has been made since freedom, but it has been extremely slow. The Green Revolution (post 1965) ensured that widespread famine in India became history (though today it is blamed for land degradation).
The Indian government in its attempt to control inflation has banned export of certain commodity food items (though this can be discriminatory to farmers who could have got a better price outside the country). On the consumption side, the government fares terribly. There is a Public Distribution System(PDS) that is meant to provide rationed amounts of basic food items and other non food products at below market prices to consumers through a network of Fair Price Shops all over the country. However, per a Planning Commission study, only about 42% of subsidized grains issued by the Central Pool reach the target group and the PDS is clearly almost ineffective. To put it simply despite the PDS, India accounts for over 400 million poor and hungry people. Also grains and food meant for the poor lie rotting in the India's storages and food release is rather poorly managed.
The actual poverty rate is India is under much debate. Government estimates put it under 30% percent. The Tendulkar committee report puts it at 37% and the World Bank put it around 42%. However, what is important here is that meaningfully perhaps the poor and the vulnerable section is almost 60% of the Indian population.
Sunday, April 11, 2010
On the Indian Right To Information Act
Right to information is a law today in over 85 countries across the World. The one in India is said to be one of the World's best for many reasons and has been hailed as a landmark in India's drive towards greater accountability. For one it was drafted by civil society and Arvind Kejriwal and Aruna Roy were instrumental in activating it. The law has taken inspiration from previous legislation from a few states (Tamil Nadu, Goa, Rajasthan , Karnataka, Delhi, Maharashtra, Assam and Jammu & Kashmir) that allowed the right to information to different extents to citizens about activities of various state government bodies.The premise for the right to information is based on the fundamental right to freedom of speech and expression. It is only if you have the access to information can you exercise your right to freedom of speech and expression. However, the implementation of the law has had its own fair share of problems.
The Right To Information Act is a law that was enacted by the Parliament of India and allows public access to information. The law came into force in October 2005 and applies to all states and union territories in India, other than for Jammu & Kashmir (as per the Indian constitution, laws passed by Parliament are not automatically applicable to the state of Jammu & Kashmir unless endorsed by the state's legislature).
The act not only applies to all constitutional authorities (including the executive, legislature and judiciary) but also applies to all entities established by an act of Parliament or a state legislature, to entities that are owned, controlled or substantially financed by government (including NGOs) and even to information in private institutions that can be accessed by a public authority under any other law in force. Under this Act, all authorities covered need to appoint a Public Information Officer (PIO). The public may submit a request to this PIO in writing along with a nominal fee (those under the BPL need not pay this at all). From thereon it becomes the PIO's obligation to provide the information. If the request pertains to another public authority, it becomes the PIO's responsibility to transfer the concerned portions of the request to a PIO of the other within 5 days. In addition, Assistant Public Information Officers (APIOs) need to be designated by public authorities to receive RTI requests and appeals for forwarding to the PIOs of their public authority. There is a time limit of 30 days for replying to the request. However, if life or liberty of any person is involved, a reply within 48 hours from the PIO is mandated. Refusal with or without reasons (no reply is deemed as a refusal) may be ground for appeal or complaint and appropriate appellate authorities are to be nominated by the government wherein the appeal or complaint can be forwarded to.
This act is not restricted to seeking of information alone but also allows the public to inspect government work and seek photocopies of documents and samples of work. The limits to inspection per se are not defined and therefore this can be interpreted rather broadly by the public.
The RTI has been effective in dealing with bribery and especially if any legitimate work was pending in any government department and government officials were not doing it, either because they expected a bribe or simple because of bureaucratic lethargy. To counter this all the common man now has to do is ask the following: give me the names of the officials who were responsible for doing my work and who have not done it, why has my work not been done so far, when will my work be done now. Consequently, it becomes difficult for government departments to reply to one's queries as they now become more accountable and therefore they sometimes end up completing the work before even responding to the RTI.
However, there has been a problem with the lack of speedy appeal to non-compliance to requests. The appellate process, notably the information commissioners, barring a few exceptions, is perceived to be functioning against citizens rather than protecting their interests. Also, the lack of a central PIO makes it difficult to pin-point the correct PIO to approach for requests and therefore the request keeps getting pushed around. Also sometimes bureaucrats working in close proximity with the government are appointed in the RTI Commissions in a non-transparent manner and the PIO, being an officer of the relevant Government institution, may have a vested interest in not disclosing damaging information on activities of her/his institution creating a conflict of interest. In the state of Maharashtra, it was estimated that only 30% of the requests are actually realized under the Maharashtra Right to Information act and therefore the compliance still needs a lot of strengthening before it can before more effective as a law.
The Right To Information Act is a law that was enacted by the Parliament of India and allows public access to information. The law came into force in October 2005 and applies to all states and union territories in India, other than for Jammu & Kashmir (as per the Indian constitution, laws passed by Parliament are not automatically applicable to the state of Jammu & Kashmir unless endorsed by the state's legislature).
The act not only applies to all constitutional authorities (including the executive, legislature and judiciary) but also applies to all entities established by an act of Parliament or a state legislature, to entities that are owned, controlled or substantially financed by government (including NGOs) and even to information in private institutions that can be accessed by a public authority under any other law in force. Under this Act, all authorities covered need to appoint a Public Information Officer (PIO). The public may submit a request to this PIO in writing along with a nominal fee (those under the BPL need not pay this at all). From thereon it becomes the PIO's obligation to provide the information. If the request pertains to another public authority, it becomes the PIO's responsibility to transfer the concerned portions of the request to a PIO of the other within 5 days. In addition, Assistant Public Information Officers (APIOs) need to be designated by public authorities to receive RTI requests and appeals for forwarding to the PIOs of their public authority. There is a time limit of 30 days for replying to the request. However, if life or liberty of any person is involved, a reply within 48 hours from the PIO is mandated. Refusal with or without reasons (no reply is deemed as a refusal) may be ground for appeal or complaint and appropriate appellate authorities are to be nominated by the government wherein the appeal or complaint can be forwarded to.
This act is not restricted to seeking of information alone but also allows the public to inspect government work and seek photocopies of documents and samples of work. The limits to inspection per se are not defined and therefore this can be interpreted rather broadly by the public.
The RTI has been effective in dealing with bribery and especially if any legitimate work was pending in any government department and government officials were not doing it, either because they expected a bribe or simple because of bureaucratic lethargy. To counter this all the common man now has to do is ask the following: give me the names of the officials who were responsible for doing my work and who have not done it, why has my work not been done so far, when will my work be done now. Consequently, it becomes difficult for government departments to reply to one's queries as they now become more accountable and therefore they sometimes end up completing the work before even responding to the RTI.
However, there has been a problem with the lack of speedy appeal to non-compliance to requests. The appellate process, notably the information commissioners, barring a few exceptions, is perceived to be functioning against citizens rather than protecting their interests. Also, the lack of a central PIO makes it difficult to pin-point the correct PIO to approach for requests and therefore the request keeps getting pushed around. Also sometimes bureaucrats working in close proximity with the government are appointed in the RTI Commissions in a non-transparent manner and the PIO, being an officer of the relevant Government institution, may have a vested interest in not disclosing damaging information on activities of her/his institution creating a conflict of interest. In the state of Maharashtra, it was estimated that only 30% of the requests are actually realized under the Maharashtra Right to Information act and therefore the compliance still needs a lot of strengthening before it can before more effective as a law.
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