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Watch The Wire’s Ajay Kumar breakdown and explain NABARD’s latest survey on rural financial inclusion.
Watch The Wire’s Ajay Kumar breakdown and explain NABARD’s latest survey on rural financial inclusion. According to the survey, the average monthly income of a family in rural areas is Rs 12,698.
Key government and tribunal positions have been vacant for large amounts of time now. It is not that competent administrative officers and judges are not available for appointment.
Vacant positions in the top management of Public Sector Enterprises – where selection of candidates is done by the Public Enterprises Selection Board – has been a common feature, and one we explored in a previous article.
In this article we examine the situation of a few top positions in the government for which selections have to be made by the government itself. These posts are not in the purview of the Union Public Service Commission and the appointments are to be made by the Appointment Committee of the Cabinet (ACC).
We start with one of India’s largest government departments, Indian Railways, which has the third largest network in the world, serving about 68,000 kilometres.
Its capital expenditure has increased from about Rs 45,980 crores during 2009-2014 to Rs 155,181 crores in 2020-2021. In 2021-22, it is budgeted to further increase to Rs 215,058 crores. The National Rail Plan projects substantial expansion in the capacity of its network by 2030 so that it can cater to the growth up to 2050. The share in freight is projected to increase from about 27% to 45%. Expansion of rail traffic and reduction of road transportation will also help in cutting emission levels.
Several top positions in the Indian Railways are however vacant.
The chairperson of the Railway Board retired in May 2022 and has been re-employed for six months. Regular appointments have not been made to the posts of member (infrastructure), member (traction and rolling stock) and member (finance). Ten posts of general managers in various zones of Railways are also awaiting regular appointment.
Also read: The Wire Impact: Railways Divest Key PSU Head Named in CBI FIR With ‘Immediate Effect’
The posts of general managers in the Railways were earlier filled through promotions but now the Railways have invited applications, though only from serving officers of the Railways. The posts of director general of safety, director general of human resources and director general of the National Academy of Indian Railways are also vacant.
Without top management in place, should we expect efficient implementation of investments planned in the Railways?
One of the most important institutions when it comes to rural economy of India is the National Dairy and Development Board (NDDB). It promotes and finances dairy cooperatives across India. The livestock sector has been growing at a compound annual growth rate or CAGR of 7.93% (at constant price) from 2014-2015 to 2020-2022. NDDB’s mandate is not limited to the milk sector alone. It can support producer-owned organisations in other sectors of agriculture also, like fruits and vegetables. NDDB supports projects of animal breeding, animal health and nutrition, dairy infrastructure and quality mark for milk and cattle feed. NDDB is the friend, philosopher and guide of milk cooperatives.
NDDB is without a regular chairperson since December 2020 and an executive director is officiating as managing director and chairperson. For a short period of a few months, the joint secretary in the Department of Animal Husbandry and Dairying was also given the charge of the post of chairperson of the NDDB.
For Indian agriculture and rural development, National Bank for Agriculture and Rural Development (NABARD) is an important institution. It provides and regulates credit to banks for promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities. For several months, the post of NABARD’s chairperson has been vacant.
The Food Safety and Standards Authority of India (FSSAI) is India’s food regulator. It lays down the science-based standards for food articles. The manufacture, storage, distribution, domestic sale and import of food items are all regulated by FSSAI so that food items are safe. The FSSAI ecosystem is very powerful and it can order the recall of any food item by manufacturers – as we saw in the case of Nestlé’s instant noodles in 2015.
Also read: What Explains the Vacancies in the Top Posts of Indian PSEs?
FSSAI is without a regular chairperson since December 2021. The chief executive officer has also been recently transferred and regular posting is yet to be done.
It is not only the top positions in the executive arm of the government which are lying vacant.
The Law Commission of India advises the government on legal reforms. In the past, it was headed by a retired judge of the Supreme Court. The post of chairperson of the Law Commission has been vacant since September 2018. On a reference from the government on Uniform Civil Code, the Law Commission, then headed by Justice B.S. Chauhan submitted a report in August 2018. It was titled ‘Reform of Family Law.’ The report said that Common Civil Code is neither necessary nor desirable. Instead, the Commission recommended codification of personal laws so that the constitutional idea of equity is guaranteed to all of India’s citizens.
As a result of the anti-corruption movement during the United Progressive Alliance’s second sting, the government enacted the The Lokpal and Lokayuktas Act in 2013. A retired judge of the Supreme Court, Justice Pinaki Chandra Ghose was appointed the first chairperson of the Lokpal in March 2019. He completed his term in May 2022 and demitted office. Since then, a regular chairperson of the Lokpal has not been appointed. Justice Pradip Kumar Mohanty, who is a judicial member is acting as the chairperson of the body.
Several posts of judicial and administrative members in the Central Administrative Tribunals are also vacant. In an unprecedented order, the Supreme Court has extended until further orders – till regular appointments are made – the terms of judicial member and the administrative member in the Kolkata bench of the Central Administrative Tribunal.
It is not that competent administrative officers and judges are not available for appointment. In fact, for every vacancy advertised by the government for top positions in the government and in tribunals, a number of applications are received from both public and private sectors. So, it is not really difficult to find suitable candidates. Quite possibly, the process of final selection for such coveted positions has become somewhat dilatory, which needs to be urgently revisited so as to ensure that by the time the top posts fall vacant, the new appointment is already finalised.
Succession planning in the government is a serious business and it needs to be given the importance it deserves.
Siraj Hussain was Union agriculture secretary. He is a co-promoter of Arcus Policy Research. Jugal Mohapatra retired as Union rural development secretary.
A version of article was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been republished here. To subscribe to The India Cable, click here.
CIC proceedings reveal contracts worth Rs 70 crore were sanctioned under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana, with the possible compromise of data security and safety.
New Delhi: The Centre has said it has no knowledge of how a Rs 70-crore contract was given to an Uttar Pradesh-based social organisation whose services were notified by the Ministry of Rural Development.
The usage and procurement of services of the website www.ruralskills.in was notified by the MoRD under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY). The Ministry has since claimed no knowledge about how the Rs 70 crore contract for the website was given out to an Uttar Pradesh-based social organisation.
In its submission before the Central Information Commission, the Ministry has also said it has no knowledge if the data of people who used the site is secure or not.
RTI query
The matter came to light following a query was filed under the Right to Information Act in September 2018 by one Amit Kumar Singh. Singh filed a request asking MoRD and NABARD Consultancy Services Pvt. Ltd. (NABCONS) who the owner of the website, www.ruralskills.in was. Singh also asked if MoRD had procured its services, whether the procurement was done through open tendering or nomination, and for a list of bidders who participated in a pre-bid meeting and in submitting the bids.
On not getting any information within the stipulated time period, he filed a second appeal before the Commission in which it was submitted that use of www.ruralskills.in was notified by the MoRD for various activities related to DDUGKY such as inviting proposals, appraisal, approval, sanctioning of projects, and monitoring and evaluation of all ongoing skill development projects by the Project Implementing Agencies (PIAs) across all states and Union Territories.
Also read: CIC Pulls Up IT Ministry for Saying it Has No Information on Aarogya Setu App’s Origins
It was also pointed out that the website name, www.ruralskills.in, was repeatedly mentioned in minutes of meetings uploaded by MoRD.
The Rural Skills website.
‘No satisfactory reply from Ministry, two central support agencies’
It was also submitted before the CIC that no satisfactory reply was received from the PIOs of MoRD, or the two Central Technical Support Agency (CTSA) – which were NABARD Consultancy Services (NABCONS) and National Institute of Rural Development and Panchayati Raj (NIRD-PR). In fact the PIOs of these two agencies clearly said that the information was only available with the ministry.
During the hearing in the case on December 29, 2020, the Central Information Commissioner Vanaja N. Sarna recorded that “it was evident that representatives from MoRD and NABCONS were passing the burden of replying to RTI queries on each other and none were giving any clear, legitimate, satisfactory reply. They were all accordingly given an opportunity to submit written submissions immediately after the hearing.”
It was in the written submissions that the anomalies in the matter were revealed. Siddharth Pandey, a consultant working with MoRD, said the website was owned by Hard Shell Technologies Pvt Limited (HSTPL), a company incorporated in the year 1992 as M/s Saubhagya Developers Pvt Limited but was renamed in February 2015. He submitted that its services were hired by NABCONS and NIRD to support MoRD.
‘Clash of interest’
The CIC also recorded his submission that HSTPL was registered at 130 Hind Nagar, Kanpur Road, Lucknow, Uttar Pradesh and Abhay Singh was its managing director and owned 98.04% of its equity shares.
“The same Mr Abhay Singh is also the Chief Executive Officer of an NGO, Manav Vikas Evam Shiksha Sansthan. As a matter of fact, the NGO of Mr. Abhay Singh, Manav Vikas Evam Shiksha Sansthan, has been sanctioned DDUGKY projects across many States (1 project each in Bihar, Himachal Pradesh, Rajasthan, 2 projects in Maharashtra and 3 projects in Uttar Pradesh),” the CIC order recorded.
It also pointed out, “All these projects were appraised and monitored by Ministry of Rural Development through a website www.ruralskills.in which was designed and owned by none other than Mr. Abhay Singh himself.”
Thus, the CIC order recorded that “there was a clear clash of interest and it can be safely assumed that because of vested interests of certain involved parties, the sanctity of the project management was severely compromised.”
Rs 70 crores
The order also noted that “the estimated sanctioned project amount for these projects sanctioned to Mr. Abhay Singh comes (to) around Rs. 70 crore.”
Further, Bhim Prakash, Under Secretary and CPIO (Skills) submitted in point-wise replies that “MoRD and Central Technical Support Agency (CTSA) i.e. NABARD Consultancy Services (NABCONS) and National Institute of Rural Development & Panchayati Raj (NIRD-PR) are not the owners of the website. The owner of the website is Hard Shell Technologies Pvt. Ltd., which may be ascertained from the website.”
The copyright line of the Rural Skills website.
To a question on how MoRD procured the services offered on www.ruralskills.in and if that was done through open tendering or nomination basis, he replied that the website was not procured by MoRD.
He further explained that DDUGKY was a centrally-sponsored scheme where projects were being implemented and monitored through CTSAs, among which all the states were distributed. “States are using services of Technical Support Agency (TSA) for monitoring of respective projects,” he added.
‘NIRD, NABCONS procured website service, not MoRD’
Stating that “MoRD never procured any services for the website,” he said, “NIRD&PR and NABCONS procured their services for monitoring of their respective States in the capacity of CTSA/TSA” and that HSTPL provided services for receiving of the project proposals for all the States without any financial implications to users.
To the question of whether the procurement was done through open tendering process or nomination, the Ministry official replied that this was “not applicable in view of above reply”.
The reply also stated that the services of the website were being used by MoRD along with other stakeholders since December 2015 and that these were “being continued” in six states by NABCONS.
The Ministry reply also stated that “no payment has been made by MoRD” in lieu of the services availed. However, it added that “payments were made by the States/CTSA/TSA of the states for monitoring the training centres. The payment was initially made at Rs 1700 per training centre + taxes, which were subsequently increased to Rs. 2000 and Rs. 2200 per training centre + taxes.”
The reply also stated that NABCONS received 1,356 DDUGKY proposals by September 30, 2018 for the states where it was the appraisal agency. However, it added that “information about the size of data is not available with MoRD or NABCONS.”
Ministry washes hands off data safety, security issues
To the crucial question of whether MoRD ascertained if the portal www.ruralskills.in fulfilled the standard software data safety and security requirements as per industry standards, the Ministry reply only stated that the portal was “not procured by MoRD”.
It, however, acknowledged that “project applications were filed and stored on the said website” and that “state project appraisal agencies used the website to view the stored documents and reports.” But despite such data being on the portal, the reply added that “no audit has been conducted”.
Also read: Plea to Publish Names of Recipients of Unclaimed Dividends in ‘Public Interest’, Says CIC
As to whether the services of www.ruralskills.in were later discontinued, the Ministry reply said on development of the Enterprise Resource Platform (ERP) system by NIRD&PR, MoRD notified its use by stakeholders in July 2018. It added that the owner of this new website – erp.ddugky.info – was MoRD and that states and Union Territories were now using this website for submission of fresh proposals.
‘Appraisal data should be with states’
Indicating that data security remained an issue, the Ministry responded to another query on whether it had received all data in safe and retrievable form from the owner of www.ruralskills.in following adoption of a new portal by saying, “DDU-GKY is implemented by the states so appraisal data should be with the states. Since MoRD has not procured services of the said website so contract exit clause is not applicable.”
In her order, Sarna referred to the delay in providing information to the appellant saying, “Even though a point-wise reply has been provided to the appellant by the CPIO, MoRD vide the letter dated 22.12.2020, however, the same is extremely delayed. The explanation of the CPIO that he was not aware that the RTI application was returned back by the NABCONS is not sustainable as there seems to be no valid justification as to why the RTI application was transferred to NABCONS and NIRD & PR, if the information was to be provided by MoRD only.”
She cautioned the CPIO MoRD “to be vigilant and provide timely replies in future.”
Under the newly announced scheme, a resolution plan for personal loans may be invoked till December 31 and will be implemented within 90 days thereafter.
New Delhi: The Reserve Bank of India’s monetary policy committee (MPC) on Thursday afternoon decided to leave key policy rates unchanged even as the economy faces a sharp downturn due to the lockdown imposed to contain the novel coronavirus pandemic.
Over the last few months, the central bank panel had effected two emergency rate cuts in a bid to bolster economic sentiments. On Thursday, however, the MPC decided to keep the benchmark repo rate unchanged at 4%, which is at its lowest level in two decades, and reverse repo rate at 3.35%.
More importantly, in view of the pandemic, the RBI also announced plans to allow lenders to provide a restructuring facility on some loans that were standard as on March 1, 2020.
An expert committee will be set up under K.V. Kamath to work out modalities and look into resolution plans of eligible borrowers.
The decisions were announced after the 24th bimonthly meeting of the RBI’s six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das.
Repo rate is the rate at which the RBI lends to commercial banks, and reverse repo is the rate at which it borrows from them.
Also read: ‘Moratorium Extension Will Determine Economic Recovery in India’
The RBI had last revised its policy rate on May 22, in an off-policy cycle, to perk up demand by cutting interest rate to a historic low. Das said the MPC voted to keep interest rate unchanged and continue with its accommodative stance to support growth.
“Global economic activity has remained fragile. A surge in COVID-19 cases has subdued early signs of revival, said Das, adding: “Economic activity had started to recover, but a surge in infections has forced the imposition of lockdowns.”
Supply chain disruptions were persisting and inflationary pressures were evident across segments, he said.
In its outlook for the rest of the year, the MPC noted that inflation was expected to remain elevated in the second quarter of 2020-21 and ease thereafter in the second half of the year. On the economic growth front, Governor Das said, without putting any number to it, that India’s real gross domestic product would contract in the first half of FY21 as well as full financial year.
Among other key measures announced by the RBI, additional special liquidity facility of Rs 5,000 crore each will be provided to the National Bank for Agriculture and Rural Development (Nabard) and the National Housing Bank (NHB). The RBI would also amend priority-sector lending guidelines to remove regional disparity – a higher weight would be accorded to districts with lower credit flows. The start-up sector has been included as a priority sector and the cap on credit to the renewable energy sector has been raised. And, to ease some stress on households in the wake up of the coronavirus pandemic, the cap on loans against gold has been enhanced from 75% to 90% of the value.
Amid fast-changing macroeconomic environment and a deteriorating outlook for growth, the MPC has had to hold off-cycle meetings in March and May this year. The MPC has cumulatively cut the repo rate by 115 basis points in these two meetings, taking the total policy rate reduction since February 2019 to 250 basis points.
A shopkeeper swipes a customer’s debit card with the logo of RuPay at an electronics goods store in Kolkata, October 31, 2018. Photo: REUTERS/Rupak De Chowdhuri
According to a research report by State Bank of India, the country’s largest lender, banks have cut rates on fresh loans by 72 basis points, the fastest transmission ever recorded, during this period. SBI itself has cut by an equivalent 115 basis points on its repo-linked retail loan portfolio.
In the run-up to the announcement, experts had mostly been divided over the possibility of a rate cut, with many ruling it out saying a call on restructuring of loans and discontinuation of moratorium was more likely. Finance Minister Nirmala Sitharaman had said that focus was now on restructuring. “The focus is on restructuring. The finance ministry is actively engaged with the RBI on this. In principle, the idea that there may be a restructuring required is well taken,” she had said last week.
The six-month moratorium given by the RBI ends on August 31. Rating agency Icra had said in a report on Wednesday that an extension of moratorium and one-time restructuring of loan could pose challenges to lenders and also impact their financial stability if the quantum was large.
A Business Standard poll of 10 economists and bond market participants had seemed geared in favour of a pause in rate cut. Of the 10, three had expected a cut, while seven had said there would be a pause. All the three bond market participants polled had expected a pause.
Also read: RBI Acts By Cutting Rates Again, but Will this be Enough to Kickstart Lending?
Personal loan help
Under the newly announced scheme, a resolution plan for personal loans may be invoked till December 31 and will be implemented within 90 days thereafter. Borrowers whose accounts are classified standard, but not in default for more than 30 days as of March 31, will be eligible for restructuring.
According to the RBI guidelines, lenders may reschedule payments of the borrower, convert the interest accrued or interest that will accrue into another credit facility. Furthermore, the plan may entail granting of moratorium to borrowers, based on assessment of income streams of the borrower, subject to a maximum of two years, and the loan tenor can be modified accordingly. The moratorium period, if granted, will come into force immediately upon implementation of the resolution plan.
A shopkeeper arranges face masks at his shop in Jabalpur, June 2, 2020. Photo: PTI
According to Krishnan Sitaraman, senior director, CRISIL Ratings, “Retail borrowers have faced stress because of the pandemic, resulting in their debt servicing ability being significantly impacted. The moratorium gave them some relief in terms of repayment, but the restructuring will give them long-term relief.”
Also watch | Former Deputy RBI Governor Viral Acharya on India’s ‘Deep’ Banking Sector Problems
However, he added that the economic challenges will result in asset quality issues manifesting itself. The retail segment is not insulated from it, as borrowers face cash-flow issues. While retail has been considered a safe segment, bad debts in retail will go up proportionately more than the other segments. In other segments, non-performing assets (NPAs) are already high. The RBI measures will help to cushion that impact.
Anil Gupta, vice-president and sector head–financial sector ratings, ICRA, said, “The debt restructuring for personal loans will be a breather for the retail segment under stress due to job/business losses and salary cuts. It will allow retail borrowers to recoup the losses. Two years of the moratorium is a substantial time within which we can expect the economy to recover somewhat.”
The RBI’s financial stability report had revealed as much as 80% of individual borrowers of public sector banks and 42% of private sector banks had opted for the moratorium as of April 30. Since then, banks have revealed their books under moratorium have shrunk, but borrowers under the retail segment opting for the moratorium are relatively higher than the borrowers in the corporate segment, indicating cash-flow issues for individual borrowers.
“The personal loan resolution framework will cover a bulk of existing loans sanctioned to individual borrowers with respectable repayment track record. It will help them repay their loans according to the changed repayment capacity caused due to the COVID-19 pandemic,” said Naveen Kukreja, chief executive officer (CEO) and co-founder, PaisaBazaar.
A man wearing face mask walks past a shop displaying colourful face masks at Gandhi Nagar textile-cloth wholesale market, on May 28. Photo: PTI
It will also provide major relief to lenders and reduce financial stability risks to the overall economy, as most lenders were expecting a major spike in their NPAs after the end of the loan moratorium facility, added Kukreja.
Lenders are expected to keep provisions higher than held under IRAC norms, or 10% of the renegotiated debt exposure of the lending institution post implementation of resolution plan. Half of the provisions may be written back upon the borrower paying at least 20% of the residual debt without slipping into NPA post implementation of the plan, and the remaining half may be written back upon the borrower paying another 10% of the residual debt without slipping into NPA subsequently.
Not only borrowers, lenders with significant retail exposure are expected to benefit from this move.
According to ICICI Direct Research, addressing hardship faced by retail borrowers amid the pandemic is a positive for lenders with substantial retail exposure, including HDFC Bank, Kotak Mahindra Bank, Bajaj Finance, and State Bank of India.
Furthermore, the RBI decided to increase the permissible loan-to-value ratio (LTV) for loans against pledge of gold ornaments and jewellery for non-agricultural purposes, from 75% to 90%. This relaxation will be available till March 31, 2021; beyond that, it will be again back to 75%.
Experts said the increase in LTV for gold loans is a surprising move. Since it is for a short period of time, lenders who wish to take risks may opt for it by giving shorter duration of loans — say six months. This has been done to provide liquidity to retail borrowers to help them tide over the crises.
A labourer carries vegetable oil packets on a tricycle at a wholesale market in Kolkata, India. Photo: REUTERS/Rupak De Chowdhuri/File
Zarin Daruwala, CEO, Standard Chartered India, said household finances will get a boost, with the increase in the loan to value of gold loans.
Kukreja said, “A higher LTV ratio will not only help borrowers avail of higher loan amounts, it may also provide relief to existing gold loan borrowers in case of any steep correction in gold prices in the near term.”
According to C.V.R. Rajendran, managing director and CEO, CSB Bank, “This step by the RBI will place more money in the hands of borrowers. While this move will help broaden the gold loan market, we will also witness increased competition in this segment. Lenders will need to ensure their valuation and risk management processes remain tight and robust.”
(With inputs from Reuters and by arrangement with Business Standard)
The government has sought Rs 1,028 crore in aid from NABARD under the Rural Infrastructure Development Fund.
Kolkata: The West Bengal government has sought assistance from the National Bank for Agriculture and Rural Development (NABARD) for repairing embankments damaged by Cyclone Amphan that barrelled through the state in May, an official said on Tuesday.
The government has sought Rs 1,028 crore in aid from NABARD under the Rural Infrastructure Development Fund (RIDF), he said.
Also read: Cyclone Amphan Puts Focus Back on Millions Displaced by Climate Disasters
“We have received a proposal from the West Bengal government for assistance under RIDF for the repair of embankments damaged by Amphan in the districts of South 24 Parganas and East Midnapore,” NABARD’s chief general manager Subrata Mandal said.
NABARD has already provided Rs 145 crore under RIDF to the state for boosting rural infrastructure in view of the COVID-19 pandemic.
The agency will also extend an assistance of Rs 270 crore to self-help groups (SHGs) in 12 districts of the state, he said.
“The SHGs are facing problems as banks are taking time in providing credit,” Mandal said.
Also read: In Photos: Witnessing Cyclone Amphan, and Damage Like We Never Imagined
NABARD has also asked the state government for identification of farmers who have not taken loans so that the agency can work toward providing them Kisan Credit Cards, he said.
As special liquidity support, NABARD has already provided assistance of Rs 1,607 crore to West Bengal for farm operations amid the pandemic, it said.
The state government has also been urged for capital infusion in regional rural banks, he added.
Rescued during the 26/11 siege at the Taj in Mumbai, the professor had promptly taken the very flight he was booked on to return to work.
Around seven in the morning there were two messages, two minutes apart.
The first said “good morning” and the next said “Some sad news. Prof. Vaidyanathan passed away late last night, early this morning”.
It is taking time to sink in, but there is no other way this news of professor Vaidyanathan’s passing could have been delivered. With a perfunctory ‘good morning’, and then a matter-of-fact news. That was what Vaidyanathan would have wanted and certainly not this write-up about him that I am undertaking.
But, unlike many of my contemporaries who were his students and part-feared, part-adored and part-respected him, I could take more liberties for not having received my formal training from him. I was his student in an informal way, and even an optional student.
I got to meet him, know him and work with him all at the same time when I was appointed on the Vaidyanathan Task Force on co-operative reform. I had heard about him from some of my colleagues, followed his work – particularly the sharp articles he would write in the Economic and Political Weekly. When I was put on to the committee, I was warned, “Watch out, he is a task master and he has a sharp tongue, not easy to work with him”.
Having worked with him and interacted with him all these years, I really did not know where this came from.
Yes, he was meticulous, stickler to data and its interpretation, but was quite an endearing personality. Friendly, caring, warm and non-hierarchical. And the most endearing part of it was that there was a certain easy attitude about himself.
“If you cut his veins, you will find data flowing instead of blood,” one of his students told me, and I was soon to realise that.
In the first meeting of the task force, he said that we would need the services of a statistician for helping the committee to navigate through the data. This was the first time that I had heard that a task force would summon the services of a statistician!
While, the secretariat for the committee was National Bank for Agriculture and Rural Development, people in Reserve Bank of India (RBI) obliged and deputed a senior officer from the statistical department to be with the committee. While the committee did run some regressions and looked at the available data, he and the rest of us were really sad at the type of data that was available. So much so that we made a mention of it indicating that the report was based on dodgy data!
Also read: Troubling Unemployment Data, Leaked in January, Now Released Post-Elections
It was not the days when data was suppressed, but those when some data was just not collected. One of the recommendations of the committee was to make better data available.
On the other hand, we the research community, should be thankful to him for ensuring that the RBI has a dedicated data warehouse and that data can be accessed at a granular level. This database is the direct result of Vaidyanathan’s intervention in 2003 when he was appointed the Chair of Expert Group on Central Database Management System.
The RBI press release indicated that the data was placed in the public domain before the recommendations of the committee!
But these activities and adventures were only much later in his career – a career that spanned academia and practice, what is cherished most is his association with Centre for Development Studies, Thiruvananthapuram and later Madras Institute of Development Studies. He also worked with National Council for Applied Economic Research, the Food and Agriculture Organisation and as a full time member of the planning commission. After the submission of the Vaidyanathan Committee report, he was inducted as a member of the central board of Reserve Bank of India.
He nurtured generations of young researchers. Every third sentence in a conversation would move towards data, analysis and what one could argue based the findings. While he worked on a range of issues – agriculture, credit, labour and co-operatives – what marked out was his work on water and his collaboration in closely working with Centre for Science and Environment on climate change related issues.
Two anecdotes summarise his being. He was in the Taj Mahal hotel (having attended the Central Board meeting of RBI) on the day of the Mumbai terror attacks. When I came to know that he was there and had safely moved to Chennai, I called him to enquire about his well-being.
He dismissed the experience by an imaginary wave of hand (on telephone) and said, “There is a piece on The Hindu about my experiences, read it. Now tell me what are you doing about your field level data from Rajasthan, when are you going to get this out?”
The piece in The Hindu is even more revealing. He is in the heritage block, where all the action is happening and he gets to know of it by switching on the television in the same hotel. He is rescued at 3 am, and on his way out, he gets into his trousers, packs his clothes in his bags, and takes the morning flight that he was booked on!
In 2017, he sent an 80-page manuscript with this message:
“Attached are reminiscences of my professional life and work. As a close friend and one who has been closely involved in wide ranging discussions over the years, I want to share them with you. I need to emphasis that these are not meant for wider circulation.”
I wrote back to him a bit disappointed that there was no mention of the Vaidyanathan Committee in this write up. Also, very little personal detail. He said, “This is about professional life not the fluff one did, you just don’t get it. It is not an autobiography, it is only professional work.”
Also read: Six Numbers the Modi Government Did Not Want You to Know in 2019
The work of the Vaidyanathan committee had brought me near Vaidyanathan and helped me to foster a friendship that was cherished for a long time. The work of the committee was indeed of very high quality – it meant much to many people – and looked like one of the last hopes for the revival of co-operatives.
As we were finalising the report, Dr Y.V. Reddy who was then the governor of RBI, volunteered to chair the implementation committee – a commitment shown at that level was somewhat rare.
As much discussion was happening on the implementation mechanisms, the Finance Minister announced a farm loan waiver programme. Possibly, that was the end of hope.
Reddy was no longer interested in the implementation committee and Vaidyanathan said, “It is over, let us move on”. That could have been one of the reasons that this work did not find mention in his reminiscences.
In his passing we have lost an eminent economist, a great and open mind, a guru and an intellectual. I have lost a friend and a guide, and of course, a down-to-earth, here-and-now philosopher.
A. Vaidyanathan is survived by his wife Shanta, daughters Rama Baru and Radhika Vaidyanathan, son-in-law Sanjaya Baru and grand-daughter Tanvika Baru. He is also survived by his brother A. Arjunan.
M.S. Sriram is a faculty member and chairperson of center for public policy at IIM Bangalore. He can be reached at mssriram@pm.me.
The government has failed to provide compensation and relief to farmers for the losses suffered during the lockdown, primarily because it lacks the fiscal space.
New Delhi: On Friday, finance minister Nirmala Sitharaman held her third press conference in as many days to follow up on Prime Minister Narendra Modi’s promise of a Rs 20 lakh crore financial stimulus package. After focussing on Micro, Small and Medium Enterprises (MSMEs), and migrant workers in the first two days, Sitharaman turned her attention to agriculture.
Sitharaman spent about fifteen minutes listing steps that the government had taken in the nearly two-month-long period of lockdown. These steps included the transfer of PM Kisan dues to nine crore farmers and payment of crop insurance claims to farmers – which had already been due and, in fact, delayed in the case of crop insurance claims.
The steps that Sitharaman subsequently announced included promises of three legal reforms to ease up agriculture marketing and the reinforcement of certain schemes that had been announced by the Centre in the past.
For instance, she announced that the government was launching the National Animal Disease Control Program which would ensure 100% vaccination of 53 crore animals and would involve spending Rs 13,000 crore. The same scheme had also been launched by PM Modi in September 2019 with an allocation Ra 12,600 crores.
Sitharaman also announced, as part of the COVID-19 relief package, existing schemes which have achieved varying degrees of success. She announced that the Operation Green launched in 2018 by the then finance minister Arun Jaitley would now be expanded to include fruits and vegetables. It was directed at easing the transport and storage of perishables and an allocation of Rs 500 crore was to be made for this – the same amount that was announced by Jaitley.
Also read: Amid Lockdown, UP Centres Procuring Grains From Fewer than 2 Farmers a Day on Average
The first actual approval of spending (not actual spending) under Operation Green came in February this year – two years after Jaitley’s announcement – when the Centre announced that it had approved projects where it would be spending Rs 162 crore for strengthening production clusters and farmer producer organisations. How much of this amount has been spent remains unknown.
The announcement to enhance the infrastructure for bee-keeping was also only a reiteration of the promise made in Sitharaman’s budget speech in February this year. Similarly, the Pradhan Mantri Matsya Sampada Yojana (PMMSY) to promote the development of marine and inland fisheries is also an existing scheme which was announced in July 2019 in the first budget after the NDA won a second consecutive term.
The government has now promised to spend Rs 20,000 crore under this scheme, which is a substantial increase from the Rs 3,700 crore that had been allocated at the time.
The Animal Husbandry Infrastructure Development Fund which Sitharaman has said will now be provided with Rs 15,000 crore through NABARD, is also an existing scheme which was set up in March 2018.
On the reform front, the government finally took the plunge and decided to roll out three key reforms which economists have long advocated for to ease the lock jams in the process of selling of produce and providing farmers with more avenues of sale.
These include relaxing the agriculture marketing rules, which Sitharaman promised would be done through a central law in due course and would enable farmers to make inter-state sales and enable e-trading of produce.
The finance minister also said that the government would amend the Essential Commodities Act of 1955. The Act, which was brought into effect during a time of scarcity, allows the government to control the price and quantity stored of any commodity listed as an essential.
Also read: Interview |’Wait for Fine Print, But Centre’s Agri Reforms a Step in Right Direction’
“What is happening is that farmers are producing. There is an abundance of crops, and this sometimes leads to issues because they would want to export, and we don’t permit that. Because of a flip-flop sometimes, farmers don’t get the benefit. Some other times, the consumers suffer. So there is a need to amend the Act,” Sitharaman said.
The government has now said that cereals, edible oils, oilseeds, pulses, onions and potato will be deregulated. It has also said that stock limits will only be imposed in “very exceptional circumstances like national calamities, famine with surge in prices.”
The third such reform announced by Sitharaman was that contract farming will be enabled and a legal framework will be devised to oversee the initiative. This would mean that farmers would be able to enter into contracts with buyers with assured sales price and quantities before the crop is sown providing them with an assured income.
Union finance minister Nirmala Sitharaman announcing the details of the government’s economic plan to fight the coronavirus pandemic, in New Delhi, May 13, 2020. Photo: PTI: Kamal Kishore
These steps have been advocated by agriculture economist Ashok Gulati for decades and he welcomed the steps. “What the government is doing with these reforms is it is creating alternative channels for farmers to sell their produce. So, they will have more choices,” he told The Wire in an interview. “I am happy that we are finally moving in the right direction. I congratulate the government for these steps.”
CPI(M)-affiliated All India Kisan Sabha, however, criticised the move. “Clearly, the move is to promote free trade under the slogan of one nation one market. The peasantry at large will be at the mercy of the Agri Business Corporations since there will not be any arrangements for price support and price stabilisation for crops. The Agriculture Produce Market Committees will be side-lined and the powers of the state governments will be eroded,” it said in a statement.
Politician and social scientist Yogendra Yadav, while agreeing that the reforms were necessary and overdue, was critical of the government for not focussing on the problems faced by farmers during the period of the lockdown and those that they would face in the next few months.
Also read: How Much Will Sitharaman’s Plan for Migrant Workers and Farmers Really Help?
“I honestly don’t understand what happened this afternoon. Was it a supplementary budget or a policy statement or were they just sent to occupy one hour of screen time and to manage headlines? What do any of the steps announced have to do with COVID and the lockdown? None of the steps will help the farmers in the next three or four months,” he said.
Yadav argued that the government ought to have compensated farmers for the losses suffered in the almost two-month-long lockdown and provided relief for the post lockdown period. A problem that the government and several commentators, including Gulati, have identified for this is that the government lacks the fiscal space.
“Why does the government lack the fiscal space? I will tell you why. Because it overestimated its revenues last year. Because it gave an ill-advised Rs 1.45 lakh crore tax break to corporates to deal with an economic downturn. This is why the government doesn’t have the money,” Yadav said.
Former Union agriculture secretary and visiting senior fellow at ICRIER Siraj Hussain said, while writing for MoneyControl, that the Centre’s announcements on Friday also signalled that it doesn’t view its ‘JAM trinity’ (Jan Dhan, Aadhar and mobile) as being capable of addressing the woes of the poor. “While the governance reforms of Essential commodities Act and agricultural marketing are good long-term measures, an important inference from three packages announced by the FM is that the Government does not see Jan Dhan, Aadhaar and Mobile trinity of much use to address the distress of the poor,” he wrote.
“The sad message for a vast majority of India’s poor is that: you are on your own,” he said.
Income-earning opportunities for a vast majority of India’s urban poor, over the next few months, look bleak. What can be done for them?
Over the last two months, India has watched in horror as lakhs of migrant workers and their families – some on cycles, many more on foot – walked back hundreds of kilometres from their place of work to their towns and villages.
A recent rapid sample survey by the Stranded Workers Action Network (SWAN) – which surveyed 11,000 migrant workers – indicates that 86% of them had not been paid by their employers during the lockdown.
Now, that the people stuck across India have been allowed by the Centre to return home by special trains, lakhs of people will go back over the next few days. Their happiness at rejoining the family will however be short lived as economic distress will catch up within weeks, if not days.
Indeed, it appears that COVID-19 has temporarily destroyed the gains of reducing poverty since 2005. The number of poor decreased from 40.7 crore in 2005 to 35.5 crore in 2009-10 and then to 26.9 crore by 2011-12. Based on NSSO data of 2011-12, Shweta Saini of ICRIER has estimated that just a 25% reduction in annual income may cause the number of poor to increase from about 21.9% to 46.3% of the population.
In all probability, most people employed in the unorganised and informal sector will lose much more than 25% of their income. It is clear that India should prepare itself for a dramatic temporary increase in poverty. It will not be confined to only the rural areas. Large numbers of people working and living in the towns and cities would not have an option to return to their villages.
This includes artisans, mechanics, technicians and other workers, most of them self-employed in the service sector or working in small, unregistered businesses. They may be without any documents of income or proof of work.
Also read: As Millions Fear Starvation, Govt to Convert ‘Surplus’ Rice Into Ethanol for Sanitiser
While 81 crore people are entitled to get food grains under the National Food Security Act (NFSA), there are many who now deserve to get food grains at NFSA rates.
This number of 81 crore would also include many migrants who may have ration cards in places from where they have migrated. The inter-state portability of ration cards is already available in Andhra Pradesh, Goa, Gujarat, Haryana, Jharkhand, Kerala, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Telangana and Tripura.
In other states, as an emergency measure, those with cards of another place or state should also be provided food grains for the next three months at NFSA rates, by noting down their Aadhaar numbers.
There are another about 10 crore people who became eligible by 2020, to get ration cards under NFSA but they have not been given the same. Since their identification is not easy during COVID-19 epidemic, it is suggested that food grains may be issued for three months to anyone presenting himself at a ration shop, by just noting down the name and Aadhar number. In order to prevent any possibility of leakage or misuse of highly subsidised food-grains, they could be charged 50% of MSP, that is Rs 9.60 per kg for wheat and Rs 13.70 per kg for rice. This will result in self targeting. The government can offer it for three months, i.e. till July 2020.
In the next one month, the NITI Aayog should determine the number of additional households which need to be covered under NFSA. For this, they have to arrive at much delayed numbers of the poor. The states can then select the beneficiaries by applying the same set of deprivation criteria which were used when NFSA was launched. It should not be difficult for the states to identify such deserving households within the next three months.
However, the main challenge is how to identify the households who deserve cash and livelihood support to survive.
Also read: Could We Have Done More to Stop the Spread of the Coronavirus?
Under PMGKY, 29.1 crore households were eligible to receive money through direct benefit transfer. This includes about 8.7 crore landowners who have received the first instalment of Rs 2,000 under PM Kisan. In June 2019, the landholders owning more than 2 hectares of land were also included under PM Kisan. According to a Nabard survey, the average income of a farmer owning more than 2 hectares in Punjab was Rs 50,000 per month in 2015-16. Clearly, this was poor targeting of scarce resources.
In addition, under PMGKY, 20.40 crore women Jan Dhan account holders are to get Rs 500 per month till June. There would be many undeserving households in this category also as there was no income criteria for opening Jan Dhan accounts.
The more deserving category of people includes about 3 crore widows above 60 years and Divyang. The government has already announced that they will get an additional Rs 1,000 during April to June under PMGKY. This is grossly inadequate.
India’s social security schemes, under National Social Assistance Programme provide just a pittance: Rs 200 per month for persons of above 60 years and Rs 300 per month each for widows and disabled of age 40-79 years. For those above 80 years, the pension amount is raised to Rs 500 per month. These rates have not been revised since 2006-07. The identification of these persons is quite robust and they deserve to receive Rs 1000 per month through direct benefit transfer, from the Central government.
In the rural areas, agriculture operations for kharif 2020 and works under MGNREGA will provide income to those who are willing to work. In view of possible surge in demand, the ceiling of 100 days under MGNREGA should immediately be raised by the Centre in 115 aspirational districts, already identified as very poor. For other districts, a decision could be taken at the end of May 2020.
Also read: COVID-19 Lockdown: In April, MGNREGA Work Crashed to Lowest in 7 Years
Since Aadhaar number is captured for PDS, MGNREGA and Jan Dhan accounts, an exercise to link these data bases may be useful for cash transfer through DBT in rural areas.
Unlike rural areas, there is no agricultural activity or employment programme in urban areas. A vast majority of urban poor may not earn any income for months. Their identification for DBT is also not easy. The Socio-Economic Caste Census (Urban) can provide a window of opportunity. This database has been largely used for the urban beneficiaries of Ayushman Bharat, drawn from 2.33 crore households engaged in 13 most vulnerable and low paid occupational groups.
Therefore, these households could be considered a good proxy for the most deprived urban poor. As an interim measure, they may be provided a cash transfer of Rs 1000 per month per household for three months, i.e. till July 2020, to enable them to survive loss of income.
The pandemic has sharply spiked urban unemployment in India from 8% in March to nearly 25% in April as per the latest CMIE report. As a longer-term intervention, we recommend rolling out an Urban Employment Guarantee scheme, at least in selected urban local bodies.
Finally, early resumption of economic activity is the only solution to address the all-round distress caused by COVID-19. It should be remembered that once the kharif sowing operations are over, rural India will also not be in a position to employ an influx of millions of migrants who had left villages for cities in search of livelihood. When the threat of COVID-19 has subsided, conditions must be created to enable them to return to work.
Siraj Hussain is Visiting Senior Fellow ICRIER and is a former Union Agriculture Secretary. Jugal Mohapatra retired as Union Secretary, Rural Development.
Delay in payment of claims has been a major problem with the PMFBY scheme, which PM Modi had said would ‘bring about a major transformation in the lives of farmers’.
New Delhi: Farmers have not been paid Rs 3,001 crore worth of crop insurance claims seven months past the deadline date, according to information obtained by The Wire through an RTI application.
The data pertains to the 2018-19 season whose last harvest – the rabi season – ended in May 2019, almost 10 months ago. According to the Pradhan Mantri Fasal Bima Yojana (PMFBY) guidelines – which require claims to be settled within two months of final harvest – the claims ought to have been settled by the end of July.
In the RTI response, the ministry of agriculture and farmers’ welfare has said that the estimated claims for the 2018-19 season were Rs 21,250 crore and Rs 18,249 crore has been paid as on February 27, 2020. So, 14%, or Rs 3,000 crore, worth of claims, have not been paid seven months after the deadline by which they should have been paid.
The gross premium collected by insurance companies in the 2018-19 season was Rs 25,822 crore, of which Rs 4,299 crore, or 16%, was paid by farmers. The rest – Rs 21,523 crore – has been paid – or will be paid, as some states have not paid the entire amount – by the Centre and the respective state.
Also read: By Making Crop Insurance Optional for Farmers, Has the Centre Effectively Ended the Scheme?
The maximum disbursement of claims has happened in Maharashtra where Rs 4,398 crore of the Rs 4,407 crore estimated claims have been paid. Gujarat has a 100% record of settling claims as Rs 2,777 crore of estimated claims have been settled.
The state with the maximum amount outstanding is Andhra Pradesh with Rs 875 crore worth of claims pending, out of the estimated claims of Rs 1,112 crore. Next is Madhya Pradesh, where not a single rupee has been paid and all the Rs 658 crore of estimated claims remain pending. Rajasthan and Jharkhand, with Rs 400 crore and Rs 370 crore, are among the other states with high amounts outstanding.
Delay in payment of claims has been a major problem with the PMFBY, as The Wire has reported several times (read here, here and here).
The Centre attempted to address the problem. In September 2018, it announced that the insurance companies will have to pay 12% interest on the amount due if the claim is not paid within two months of the cut-off date.
The threat of penalty has not worked fully, the information obtained via RTI has revealed, as Rs 3,000 crore remain pending seven months after the deadline date even when the penalty mechanism was in place. It is also not yet clear if the insurance companies will end up paying the penalty.
Insurance companies contend that the delay occurs when either the state or the centre delay in paying their share of premium, or when the state delays in providing data on crop loss. “We are not interested in delaying claims. We know we have to pay. But if we don’t get the premium amount, how can we pay claim?” said an official of a private insurance company.
The Centre argues that the delay occurs because states do not pay the premium amounts on time. “The states are not making the payment of premium on time. That is the main problem with crop insurance. For example, Madhya Pradesh has not paid its dues for the 2018-19 season,” said an official in the union ministry of agriculture and farmers’ welfare.
States, on the other hand, argue that they are cash strapped. “The Centre has been reducing Madhya Pradesh’s share of taxes every year. And given the fiscal responsibility act, there is very little fiscal space to manage all the schemes. The Centre keeps passing on its responsibilities to the states,” said an officer in the agriculture ministry of Madhya Pradesh.
These three stakeholders jointly responsible for the implementation of the PMFBY have been voicing these concerns since the first season under the scheme in 2016. But have been unable to solve the problems as delays in settlement of claims continue.
Farmers argue that the compensation for crop damage would be useful if it comes in time for the next sowing season. If a farmer suffers loss in the kharif season, the compensation should be paid in time for the money to be used as working capital for sowing during the rabi season.
When the PMFBY was launched in January 2016 by merging two existing crop insurance schemes, Prime Minister Narendra Modi had said that the scheme would ‘bring about a major transformation in the lives of farmers’.
Also read: BJP Manifesto: Voluntary Enrolment Under PMFBY Could Kill the Programme
That, however, has not happened and over the last two years, farmers have demanded that the scheme be made optional. Until recently, the scheme was mandatory for farmers who took loans under the formal credit system as premium amount was deducted from their loans.
In February this year, the Centre finally gave in to the demands and made the scheme voluntary. As Siraj Hussain has written for The Wire, this move could significantly scale down the scheme.
Farmers who had opted for the scheme, i.e. those who had not taken loans but had opted for crop insurance (non-loanee farmers), were only 27% in 2017-18. That percentage has increased to 39% in kharif 2019.
But most non-loanee farmers who have opted for crop insurance are from one state – Maharashtra – where a Bombay high court order means that premium cannot be deducted from the loan amount without consent of the farmer.
“The number of non-loanee farmers in Maharashtra is most probably an over estimate as loanee farmers have been listed as non-loanee to work around the court order,” said the agriculture ministry official.
So, if Maharashtra is taken out of the equation, only 17% of the total farmers enrolled in PMFBY in Kharif 2019 are non-loanee raising questions on the scope of the scheme now that it has been made voluntary.
As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers in its erstwhile format.
New Delhi: The Union Cabinet on Wednesday made some major changes to the Pradhan Mantri Fasal Bima Yojana (PMFBY), the most notable among which is that it is now voluntary for all farmers.
Earlier, all farmers who had availed themselves of loans on their Kisan Credit Card were registered for the PMFBY automatically and the amount of premium was deducted from their loan amounts. Farmers who were not in the formal credit system could choose to opt for the scheme.
Now, even farmers who have taken loans can choose to not enrol themselves in the PMFBY. This had been one of the promises made by the Bhartiya Janata Party in its manifesto prior to the Lok Sabha elections of 2019.
Over the period of implementation of PMFBY, on an average, around 70% of farmers who registered for the scheme were those who had taken loans, and who could have, potentially, chosen not to register for the scheme had the choice been available.
Farmers and farmer organisations had demanded that the scheme be made voluntary as they argued that they see no benefit in the scheme and should not be made to pay the premium involuntarily.
As The Wire has reported over the last year and a half, the PMFBY was of limited benefit to farmers as the claims raised remained pending for several months after the stipulated time period in which they ought to have been paid.
Also read: Under Modi’s Crop Insurance Scheme, Companies Owe Farmers a Whopping Rs 2,800 Crore
We had also reported that after the launch of PMFBY – which subsumed two existing schemes – premiums collected by insurance companies increased by 350% while the number of farmers covered by the scheme remained about the same.
In its revamp, the government has also said that states which fail to pay their share of premium subsidy within the time allotted, will not be allowed to implement the scheme in subsequent seasons.
One of the reasons why insurance companies delayed making payments of claims to farmers was that in several cases, they had not received the premium amount that was supposed to be paid by states. The cut off dates will now be March 31 for kharif and September 30 for rabi.
The new PMFBY also contains a provision for using ‘technology solution’ to arrive at yield data in case states fail to provide yield data beyond the cut off dates. It has not yet been made clear what exactly the ‘technology solutions’ will entail.
In another decision, the Cabinet also approved the formation 10,000 farmer producer organisations by 2024 which is set to cost Rs 4,496 crore. This will be implemented jointly by the Small Farmers Agri-business Consortium (SFAC), National Cooperative Development Corporation (NCDC) and National Bank for Agriculture and Rural Development (NABARD).
