Indian Economy by Sanjeev Verma [Raz Kr]

8/17/2019 Indian Economy by Sanjeev Verma [Raz Kr]

http://slidepdf.com/reader/full/indian-economy-by-sanjeev-verma-raz-kr 1/78

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T

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INDI N

E

C

O

N

O

M

Y

F

o

r

U

P

S

a

n

d

S

ta

t

e

iv

il S

e

rv

i

c

e

s

P

r

e

li

m

in

a

r

y

a

n

d

M

a

i

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E

x

a

m

in

a

ti

o

n

s

l

s

o

u

s

e

fu

l

f

o

r

o

t

h

e

r

o

m

p

e

t

it

iv

e

E

x

a

m

i

n

a

ti

o

n

s

D

o

m

e

s

ti

c

E

c

o

n

o

m

y

E

x

t

e

rn

a

l

S

e

c

to

r

L

o

o

k

in

g

O

u

tw

a

r

d

s

G

lo

b

a

l

E

c

o

n

o

m

y a

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O

u

tl

o

o

k

®

Indian

Economy

Revisited



C

H

P T

E

R

o

U

T

U

T

O

N

E

CO

N

OM

Y

O

N

P

T

OF

OU

TP

UT

W

hat

w

ould

w

c

un

der

stan

d i

f

w

e

were

to

ld

th

at

tod

ay

th

e

lar

ges

r

eco

nom

y

in

the

w

orl

d

is

the

U

S

Sure

ly

,

wc

w

ould

w

ond

er

on wh

at

param

eter

—

w

heth

er in

terms of

la

nd

are

a

o

r

population

or

output

In

eve

ry

eco

nom

y

go

ods

’

arc

b

ein

g

pro

duc

ed

th

at

is

.

raw

m

ater

ials ar

c

b

ein

g

co

nve

rted

into

fini

shed g

ood

s

a

gric

ultu

ra l

cro

ps

for

es tr

y

lives

tock

ste

el

,

ce

ment

,

ca

rs

cyc

les

b

read

etc

.

Sim

ilar

ly

se

rv ice

s

’

arc

al

so

b

ein

g r

end

ered

l

ike

ba

nkin

g

insu

ranc

e

sh

ipp i

ng

e

tc. All

o

f

thes

e

h

ave

a

m

onet

ary

val

ue

in

the

lo

cal c

urre

ncy

like t

he

USD in

t

he

US

an

d

the

IN

R

in

In

dia

Thus

ou tp

ut

per

sc

im

pli

es

ag

gre

gatio

n

of

mon

etary

valu

e

of

all

t

he

go

od

s

a

nd

se r

vice

s

p

rod

uced

in

an

e

cono

my

in

a

give

n

tim

e

p

erio

d

w

hich ma

y

be

a

quart

er

3

mo

nths

h

aif

a -

yc

ar

(

6

m

ont

hs

)

or

a

ye

ar

1

2

mo

nth

s

.

In

other

words

,

output

indudes all

goods

and

services

exchanged

for

money

.

For

ex

am

ple

a

fishe

rma

n

cat

chin

g

fis

hes

m

ay

use

som

e

of it for

sel

f

co

nsum

pti

on

an

d

th

e

re

ma

ining

may

be use

d

t

or

se

llin

g

in

the ma

rke

t

;

thus

,

ih

c

m

oneta

ry

val

ue

o

f

all

th

e

fish

es

w

oul

d

b

e cons

ider

ed

und

er

th

e

c

oncep

t

of

ou

tput

.

It

sou

nds s

imp

le

s

o far

.

bu

t

de

lvin

g

a

littl

e

de

epe

r

ou

tput

ma

y

as

w

ell

co

mpr

ise

of

in te

rm e

diat

e

g

ood

s

l

ike

s

teel

a

nd cem

ent

wh

ich

in tu

rn

ar

e

in

puts

fo r

o

ther

go

ods

refer

red

t

o

as

f

inal

goo

ds

’

. The

se

fin

al

go

ods

cann

ot

be

p

ut

to

f

urth

er

u

se

e

xcep

t

fo r

use

li

ke

c

ars

b

uild

ing

s etc

.

If

we were

to in

clud

e

bo

th th

e

inte

rmed

iate

a

nd

fin

al

g

ood

s

i

n

ou

r

de

finit

ion

o

f

outp

ut

,

then

that

would

effective ly

mean

counting the

same

thing

twice

and

in

the

proc

ess

inHatc

the

outp

ut

of an

econ

omy

. Fo

r

e

xam

ple

,

pr

odu

ctio

n

o

f

whe

at an

d

its

m

illin

g

as

fl

our

res

ults in

the

m

akin

g

of

b

read

;

thus

for

outp

ut

p

urpo

ses

on

ly

the

m

oneta

ry

v

alue

of

br

ead

wo

uld

be

con

side

red

a

nd

not

th

at

of

wh

eat

and f

lour

The

refo

re

w

c

ca

n

co

nclu

sive

ly

deri

ve

th

at

the

outp

ut

sh

ould

ha

ve

only

fina

l

g

ood

s

in

ord

er

to

avo

id

do

uble cou

nting

.

B

ut

w

hat

a

bout a

sal

e

of s

eco

nd

han

d g

ood

s

lik

e

s

ay

a

s

eco

nd

han

d

car

S

ho

uld

th

ey

be

refl

ecte

d

in

che

ou

tput

o

f

an

eco

nom

y

The

a

nswe

r

is

no

,

as

th

ey

h

ave

alre

ady

bee

n

in

clud

ed

o

nce

wh

en

ma

nuf

actu

red

an

d

the

refo

re

do

es

not a

moun

t

to a

fres

h pr

odu

ctio

n

T

hus,

outp

ut

of an

econ

omy

is

th

e

mone

tary

va

lue

of

the

fina

l

goo

ds

an

d

se rv i

ces

in

a

I

give

n

tim

e

p

erio

d



THE

IND

IAN

E

CON

OMY

OU

TPUT

f

AN

I

bu

w

h

o

«

v

b

®

in

„

5

„

.

n

riva

lcMH

O

M

*

.

Tin

t

BirU

.

R

djJnC

t

ev

en

g

ovcntn

u

n

.

li

ke

he

public

««

°

r

co

mp

.

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ONG

C

.

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e

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nciiistr

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.

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.

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ny

.

Samsu

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etc.

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7

we

»

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co

J

*

»

n

ioiietMy

vslut

ol

all

he

fi

nal

goodc

a

nd

.

onto

.

p

roduct

wi

,

hin

he

geographic

boundary

of

a

coun

ry

,

irrc

specuv

e

ol

who

.

he

pr

oducer

of

g

oods

and

se

rvices

ar

e

her

,

i

,

is

c

alled

do

nresri

c

our

pu

.

o

.

he

econom

y

H

u

,

*

in

the

I

ndian

c

ontext

,

domes

tic

out

put

con

sists

of

the

moneta

ry

value

of

al

l

fin

al

g

oods

and

serv

ices

p

roduc

cd

/

re

ndc rc

d

by

in

dividu

als

,

priva

te

sector

p

ublic

secto

r

and

f

oreign

comp

anies

.

.

.

Havin

g

l

ooked

into

wh

o

arc

t

he prod

ucers

in

an

e

conom

y

,

le

t

us look

no

w

at

how

the

g

oods

are

prod

uced

In o

rder

to

prod

uce

goods

,

at

first

w

e

nee

d

s

ome

pla

cc

/

infras

tructu

rc

where

th

e

g

oods

can

be

produ

ced

.

Thu

s

we

w

ould

need

to

hav

e a

som

e land

{

or

bu

ilding

;

m

oney

as

s

eed capi

tal

,

in

order to

bu

y

mach

ines

and

raw mater

ial

,

invest

in

marke

ting

,

arran

ge

for

r

eimpor

tation

etc

.

;

labo

ur

fo r

prod

uction

a

nd

th

en

a

pe

rson

w

hom

we

ca ll

t

he

en

trepren

eur

as

the

produ

cer

of

good

s

ihese

are

known

as

‘

factors

of

production

’

in

an

e

conom

y

.

Thu

s

in

a

pro

ductio

n

l

ife

cycle

’

each facto

r

of

pro

ductio

n w

ill ha

ve

an

ass

ociated

cost

be

it

th

e

see

d capit

al

for

inv

estmen

t

,

rent

for the

placc

/

in

frastru

cturc

,

or

for

that

m

atter rhe

l

abour

w

ages

and

sa

laries

;

as

an

entrep

reneur

the

p

rofit

th

at

an

e

ntrepren

eur gains

at rh

e en

d

o

f

the

d

ay

,

is

pr

incipa

lly

for

the

risk that

hc/

she

take

s

f

or

p

roduct

ion

.

It

is

imp

ortant

to

note

that

pro

fit

is

a c

ost for

a

ny

econ

omic

ac t

ivity

:

b

ut

t

hen

what

is

cost

is also

inc

om e

for

fact

ors of

produ

ction

.

F

or

e

xampl

e

,

re

nt is

an

income

f

or

land

,

interest

is

die income

for

capital

wages

and salaries

are

the

income

for

workers

and

superv

isors

a

nd

pr

ofit

per

se is

the in

come

fo

r

th

e

r

isks

take

n

b

y

the

en

trepren

eur

Let us

i

llustra

te

th

is

examp

le

fu

rdicr

wi

th

nu

mbers.

F

ollow

ing

are

the

deta

ils

of

a

m

anufa

cturin

g

comp

any

:

Land

rent

Labou

r

(

W

ages

Sa

laries

C

apital

in ter

es t

En

trepren

eur

Profit

T

otal

?

1

0.000

1

,

000

*

7

50

1500

12

,

25

0

theo

u

p

u

is

h

e

”

mc

T

^

‘

nc

ludtd

mre

p

encu

r

i

s

2

5

;

what

is

S

o

fa

r

,

we

ha

t dn

the

inc

om e

of

Indi

a

i

s

nece

ssary

r

n

Wi

t

a

ll th

e

In

dian

nation

bu

t

if

w

e

iinludi

lo

gical

to

ded

uct

if

referred

to

as

No

h

Dom

estic

P

rod

l

N

et

fac

tor

i

ncome

fi

i

ncome

o

f

Ind

ian

n

product

is

less

rhai

than

the

i

ncome o

f

An

i

ncreas

ed

lo

to

fore

ign

entitie

s

unch

anged

.

f

W

C

N EP

T

he

output

of an

are

consumed

eve

machi

nes

co

uld

b

capi

tal

stock

in

tlv

Le

t

us

as

sume

t

of cars

.

that

i

s.

t

ex

ample

a

car

is

i

or

consu

mption

c

onsum

ption

(

or

i

if

it is

acc

ounte

d

I

Accordingly

,

t

GDP

)

.

He

nce

,

Th

us

th

ere

ar

e

f

N

Dl

>

L

et

us

no

of growth

.

Tear



OUTPUT

OF

AN

ECONOMY

;

be

ere

,

,

the

So for

.

wsi

has discussed

about the

domestic

uuiput

/

produci

/

income

,

hut

what

about

the

income

oflndians

staying

abroad

?

For

a

more

comprehensive

analysis

of the

output

,

it

is necessary to look beyond the

geographic boundaries

that

would

include die

income of

ail the

Indian

nationals

irrespective

of the

country

they

currently

reside

lint

if

we

include

the

income of

Indian nationals outside the

country

,

it

will

also he

logical

to

deduct

the

Income

of

foreign nationals

residing

in

our

country

.

Tbit

is

also

referred

to as Net

Factor

Income From

Abroad

(

NHAP

),

Thus

,

final

and

Domestic Product

*

Income of

Indians

Abroad

Income

of

Foreigners

in

India

National Product

the

)

;

the

an

for

an

for

,

and

r

us

is

is

or

Domestic Product

(

+

/

-

)

NFIAD

=

National Product

Net foctor income from

abroad can

be

positive

or

negative

depending up

on

which

is

more

—

income

of

Indian

nationals

abroad

or

income

of

foreign

nationals

in

India

,

that

is,

national

product

is

less

than

the

domestic

product

,

if

the income

of

Indian nationals abroad

is Less

than the

income of

foreigners

in

India and vice versa

An

increased

foreign

currency

denominated

debrof

a

country

Or

selling

domestic

assets

to

foreign

entities

would tend to reduce

the national

product

leaving

domestic

product

unchanged

.

|

Q

C O N C E P T

O F

DEPRECIATION

The

output

of

an

economy

also

consists of

production

of machines /machineries

which

are consumed

every

year

,

referred

to

as

depreciation

and

much

of

the

output

of

such

machines could

be

replacement

in

nature and not

signilying

additions to machine or

capital

stock

in

the economy

Let us assume

that

cars

are

being

produced

in an

economy

and there

is

also

depreciation

of cars

,

iliac

is

,

the

cats

would

eventually have

to be

replaced

after

their

shell

-

life

For

example

,

a

car

is

priced

at ?

3.00

,

000 and

has a life of

,

say

10

years.

Then

,

depreciation

(

or

consumption

)

of car

is

?

30

,

000 a

year

Thus

,

if

the

output

of

an

economy

ignores

consumption

(

or

depreciation

)

of its machine

stocks

,

it is

referred

as

a

gross

’

concept

and

if

it is accounted

for

it

is known

as

‘

net

’

concept

Accordingly

,

there

is Gross

National

Product

(

CNF

)

and

Gross

Domestic

Product

(

GDP

)

.

Hence

,

GNP

-

Depreciation

=

Net

National

Product

(

NNP

)

GDP

-

Depreciation

=

Net

Domestic Product

(

NDP

)

Thus

,

there

are

four

concepts

in

the

output

of

an

economy

GNP

.

GDP

,

NNP

and

NDP

Let us

now

rry

to

understand which

method

is

technically

the

best measure

of

growth

.

Clearly

,

It

is

the NNP

as

it

first

covers

all the

nationals

of

a

country



O U T

P U T

O F

AN

E

CON O

MY

l

d

s

The

mom

ent

we

start

talking

a

bout

the

moneta

ry v

alue

c

ither

at

market

price

s

or

fact

or

cos

t

the

concept

of

infl

ation

b

ecomes

impo

rtant

In

simpler

term

s

inflatio

n is

incr

easing

prices

an

d

during infla

tionary

times

it

ten

ds

t

o

in

flate

th

e

value

in

n

ominal terms

.

Supp

ose

inf

lation

is at

10

p

ercent

,

it

implies

that

the

price

is

going

u

p

by 10

percen

t

,

that is

to

say

that

the fa

ctor

cost

is

al

so

incre

asing

,

which

would

incr

ease

t

he

output

ev

en

th

ough

there

is

no

p

hysical in

crease i

n

the

produ

ction

of

good

s

and

serv

ices

,

i

t

is

beca

use

of

thi

s

r

eason

that

th

e

o

utput

meas

ured

a

t

fac

tor

c

ost would have

to

b

e

a

djusted

to

actuall

y

reflect

the

i

ncrease

d

pr

oductio

n

of

go

ods

a

nd

services

in

an

eco

nomy

.

The

a

djustme

nt

is

a sta

tistical

ex

ercise

which

is

done

by

using

the

G

P

def

laror

that gives

th

e

out

put

t

factor cost

in

terms

of

consta

nt

prices

.

Ihc

output

at

constan

t

p

rices

r

efers

to the

ou

tput

ob

tained

after

being

adju

sted for

infl

ation

To

fu

rther

e

xplain

sup

pose

we

do

no

t

adjust

f

or

infl

ation

an

d

the

outp

ut

growth

for

an

yea

r

is

9

per cent

so

is

inflat

ion

It

m

eans

th

at

die

out

put

ha

s

nor

increas

ed

,

bu

t their

prices

have

incre

ased

With

out

adjusting

f

or inflation

,

the

increas

e

in

output

has

li

ttle or

no

signi

ficance

and

actually

could

be

misle

ading

This

adjus

tment

for

in

flation

is

als

o

known as

real

or ot

herwise

it

is

‘

n

ominal

’

and

i

s

generic

in

nature

Rea

l

growth

is

adjusted

for inflati

on

whi

le

nomi

nal grow

th

ignores

adjus

tment

for

infl

ation

Growth

by

definitio

n

has

to

be

‘

re

al

Sim

ilarly

,

the

re

is

‘

no

minal

’

and

‘

real

in terest

rate

incom

e

wag

es

but

there

is

no

con

cept

o

f

no

minal and re

al

g

rowth

as

grow

th

by

definitio

n has

to

be

adjus

ted

fo

r

infla

tion

This

is

implie

d

in

the

mea

ning

of the

word

growth

itse

lf

Ihe

use o

f the

word

gro

wth

’

in

the

Indian

contex

t implie

s increa

se in

G

DP

at

fac

tor

cost

at

constant

prices

In

India

the entire

compu

tation

is

the

re

sponsib

ility

of

the

Centra

l

S

tatistical

Or

ganisati

on

C

SO

Gov

ernment

of In

dia

The

es

timates

of

grow

th

arc

provi

ded

by

the

or

ganisati

on

on

quarterl

y

b

asis at

the

end

Marc

h

,

Jun

e

Sept

ember

and

Dec

ember

every year

and

the

ann

ual

grow

th

e

stimates

a

re

pr

ovided during

A

pril

-

March

every year

wh

ich is

als

o

refe

rred

ro as the

fin

ancial

year

c

alendar year

is

Janu

ary

D

ecemb

er

All

the

gov

ernment

and

corpora

te

acco

unting

in

Ind

ia

is wit

h refere

nce

to

the

financi

al

year

What

w

e

have

cov

ered

s

o

far is

a

simpl

e

e

xposure

t

o

Nat

ional

Inco

me

Agg

regates

also

referr

ed

as

‘

N

ational

Inc

ome

Ac

countin

g

for stud

ents

wh

o

do

n

ot

h

ave

exposure

to

economics

.

This

is

t

he

output

me

thod

of co

mputati

on

o

f

N

ationa

l

Inc

ome A

ccountin

g

.

T

here

are

other merh

ods

lik

e th

e

inco

me and

exp

enditur

e

m

ethod

releva

nt

for

th

e student

s

w

ho

want

to

pursue

a

career in

econom

ics

. For

further

study

on these topi

cs

,

refe

rence

can

be

m

ade

to

N

CERT

text

book

of Oass

X

and

X

II



TOWARDS

INCLUSIVE

GROWTH

constraints

,

These factors were a

handicap

earlier fo r

Indl

*

but

tiling

*

have

dunged

In

ih c

21

ST

century

.

The

21 si

century

has

been

good

for India

,

growth

rates

jyad

itaricd

moving

upwards

and

on were on the

verge

ol

achieving

a

double

-digit

growth

*

probably

h i

(

he iiiu

time

,

except

may

be for a

year

briefly

in

die

1980

s

,

Though

growth

rati

-

,

have

intreaicd

but

n

has

noimade

any

perceptible

impact

on

the

poverty

,

unemployment

,

inret-Zintra

-

region

;

.

I

jnd

income

imbalances

.

Despite

the

high

growth

mies

achieved

,

we

have

nor

got

die

desired

results

.

There has

been

a

distinct deceleration

in

growth

since 2010

sliding down

to the lowest

in

Last decade

of

percent

,

lim

die

larger

question

remains of

high

growth

achieved had not

yielded

tangible

benefits

to

the Indian

economy

This would

lead

us to

another

concept

ol

development

'

,

J low are

growth

an d

development

different from

each other

?

f

^

D E V E L O P M E N T

— I N C L U S I V E GROWTH

The

concept

of

development

is

qualitative

whereas

that

of

growth

is

quantitative

While

growth

is an

arithmetic

number

signifying

an increase in

the

output

of an

economy

,

development

includes distribution

of

output

or the

ability

of

the

increased

output

and

income to

reach the

bottom

-

most

stratum of

society

.

Development

also

implies

equitable

distribution

in

the

economy

,

Earlier it was

widely

believed that

initially

increased

growth

is

required

and then

development

would

happen

through

what

is referred as the

trickle

-

down

theory

'

This

means that

rhe increased

growth

would

percolate

down

to

the bottom

-

most stratum

of

society

and

provide equirablc

distribution

This is

the

significance

of the

word

growth

and

development

,

In

the earlier years

th e

problem

was

our

inability

to

push

up

rates

of

growth

and

the

emphasis

was on

increasing

growth

fo r the trickle

-

down

theory

to

work which would

have

allowed

for

development

and

equitable

distribution

,

J

3

ut

the

story

for India is

quite

different

since the

economic

reforms

initiated in

1991

and

since

2005

.

India

has

nor

only

broken

through

the low -

growth

cycle

hut

also

become

one of the fastest

-

growing

economies

after

China

.

Tlie

high

growth

rate

achieved

since

2005

questions

the trickle-down

theory

in

India

,

as

it has

not benefired

rhe Indian masses

in

terms

of

lowering

absolute

poverty

levels

significantly

,

creating

employment

opportunities

,

reducing

inier-Zintra-

regional

imbalances

(

rather it has

only

accentuated

)

There

are

reasons

to

understand

why

trickle

-

down

theory

’

has not

worked

fo r

India

,

firstly

,

the

Indian

economy

has

a

structural

problem

of

excessive economic

dependence

on

the

agricultural

sector

.

Over

65

per

cent of

the

population

is either

direcrly

/

indirectly

dependent

on this sector

The

contribution

of the

agricultural

sector

to

theoverall

gross

domestic

product

{

GDP

)

is

only

18

per

cent

The

largest

contribution

of

over

55

per

cent

comes

from

the

services

sector

and the

remaining

27

per

cent

is

contributed by

the

secondary

sector

of

which

only

14

per cent

is

by

the

manufacturing

sector

. The

sector

contributing

the

least to

GDP

has

the

maximum

dependence

(

agriculture

)

and

(

he

sector

contributing

the

most

,

has

the

least

dependence

(

services

)

.



C

H

P

T

E

R

o

T

O

W

A

R

D

S

I

N

L

U

S

I

V

E

G

R

O

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T

H

Growth

and

D

e

v

e

l

o

p

m

ent

—

Q

G

R

O

W

T

H

R

A

T

E

O

F

I

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I

A

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w

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k

to th

e

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ta

te

m

en

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gi

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ni

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f

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g

ro

w

th

ra

te

s s

lo

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ng

d

ow

n

’

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T

he p

hr

a

se

b

as

ic

a

ll

y

m

e

an

s

t

ha

t

t

h

e

o

ut

pu

t

o

f

a

n

e

co

n

o

m

y

is

i

nc

r

ea

si

n

g

b

u

t

a

t

a

decreasing

r

at

e

ov

e

r

th

e

pr

ev

io

u

s

q

u

ar

te

r

h

al

f

y

e

ar

/

y

e

ar

w

h

ic

h

ev

e

r

i

s t

he

r

e

fe

re

n

ce

p

er

io

d.

If

d

u

ri

ng

t

he

sa

m

e

r

ef

er

en

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e

p

er

io

d

o

u

tp

ut

h

a

s

d

e

cl

in

e

d

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e

n

it

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r

ef

e

rr

ed

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s

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on

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ac

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ut

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er

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e

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ce

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io

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ll

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r

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co

n

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nu

o

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ce

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io

n

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re

k

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w

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d

e

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re

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si

on

,

U

n

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il

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ld

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T

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at

D

e

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ri

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savings

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is

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h

e

maximum

d

e

pe

n

d

en

c

e



TOWARDS

INCLUSIVE

GROWTH

constraints

,

These factors were a

handicap

earlier fo r

Indl

*

but

tiling

*

have

dunged

In

ih c

21

ST

century

.

The

21 si

century

has

been

good

for India

,

growth

rates

jyad

itaricd

moving

upwards

and

on were on the

verge

ol

achieving

a

double

-digit

growth

*

probably

h i

(

he iiiu

time

,

except

may

be for a

year

briefly

in

die

1980

s

,

Though

growth

rati

-

,

have

intreaicd

but

n

has

noimade

any

perceptible

impact

on

the

poverty

,

unemployment

,

inret-Zintra

-

region

;

.

I

jnd

income

imbalances

.

Despite

the

high

growth

mies

achieved

,

we

have

nor

got

die

desired

results

.

There has

been

a

distinct deceleration

in

growth

since 2010

sliding down

to the lowest

in

Last decade

of

percent

,

lim

die

larger

question

remains of

high

growth

achieved had not

yielded

tangible

benefits

to

the Indian

economy

This would

lead

us to

another

concept

ol

development

'

,

J low are

growth

an d

development

different from

each other

?

f

^

D E V E L O P M E N T

— I N C L U S I V E GROWTH

The

concept

of

development

is

qualitative

whereas

that

of

growth

is

quantitative

While

growth

is an

arithmetic

number

signifying

an increase in

the

output

of an

economy

,

development

includes distribution

of

output

or the

ability

of

the

increased

output

and

income to

reach the

bottom

-

most

stratum of

society

.

Development

also

implies

equitable

distribution

in

the

economy

,

Earlier it was

widely

believed that

initially

increased

growth

is

required

and then

development

would

happen

through

what

is referred as the

trickle

-

down

theory

'

This

means that

rhe increased

growth

would

percolate

down

to

the bottom

-

most stratum

of

society

and

provide equirablc

distribution

This is

the

significance

of the

word

growth

and

development

,

In

the earlier years

th e

problem

was

our

inability

to

push

up

rates

of

growth

and

the

emphasis

was on

increasing

growth

fo r the trickle

-

down

theory

to

work which would

have

allowed

for

development

and

equitable

distribution

,

J

3

ut

the

story

for India is

quite

different

since the

economic

reforms

initiated in

1991

and

since

2005

.

India

has

nor

only

broken

through

the low -

growth

cycle

hut

also

become

one of the fastest

-

growing

economies

after

China

.

Tlie

high

growth

rate

achieved

since

2005

questions

the trickle-down

theory

in

India

,

as

it has

not benefired

rhe Indian masses

in

terms

of

lowering

absolute

poverty

levels

significantly

,

creating

employment

opportunities

,

reducing

inier-Zintra-

regional

imbalances

(

rather it has

only

accentuated

)

There

are

reasons

to

understand

why

trickle

-

down

theory

’

has not

worked

fo r

India

,

firstly

,

the

Indian

economy

has

a

structural

problem

of

excessive economic

dependence

on

the

agricultural

sector

.

Over

65

per

cent of

the

population

is either

direcrly

/

indirectly

dependent

on this sector

The

contribution

of the

agricultural

sector

to

theoverall

gross

domestic

product

{

GDP

)

is

only

18

per

cent

The

largest

contribution

of

over

55

per

cent

comes

from

the

services

sector

and the

remaining

27

per

cent

is

contributed by

the

secondary

sector

of

which

only

14

per cent

is

by

the

manufacturing

sector

. The

sector

contributing

the

least to

GDP

has

the

maximum

dependence

(

agriculture

)

and

(

he

sector

contributing

the

most

,

has

the

least

dependence

(

services

)

.



TOWARDS

INC IU5

IVE

f iKOWIM

iMr

|

|

er

Ideally,

.

JJlt

|

,

,

>f

to

to

the

surfcc

in

a

Urge

in

formal

d abject

and

be

to

d faster

as

only

road

.

ische poorflhtabo

moving up

the ladder lit

imm

of

income

mid

welfare

,

even

(

bough

Irss

proponiimjiely

ihau

li t

-

privileged

vellum

nf

ilic

riminniy

.

As

long

as bnrh die

subsets

in

an

moving up

in

die

name direction

,

have

means

of livelihood

,

ate

economically

lieiicr

nil

and theit

basic

needs

are

mei

,

the

objective

of

equitable distribution

r

,

bring achieved

.

Hence

,

inequitable

distribution

would

mean the

rich

gening

richer and

the

poor

remaining

poor

,

or

the worse

,

still hemming

poorer

.

As

wc

have

been

discuss

log

that

Inclusive

growth Is oriented towards masses

,

what

should inclusive

growth give

)

or

when

can

we

ray

that

growth

ha s heroine

inclusive

and

begun

to

deliver

?

Inclusive

growth

should lead to

;

(

1

)

Employment

opportunities

lor

the

masse

*

at the

entry

level

,

providing

livelihood

,

means

;

ol

income

,

increasing

ihrir

purchasing

power

and

improving

their

well

-

heingness

/ tide dmuM result

In

reducing absolute

poverty

levels

.

(

2

)

Reduction

of

inter

/

inirj

-rcginnaJ

imbalances

.

(

5

)

Create

Opportunities

lor

shill development

(

form

at

ion

,

(

4

)

Better

dispe

rsd

of indusi

rits

,

(

5

)

Increased

agn

>

based industries

(

6

)

A

gradual

shill

away

from

the

excessive

economic dependence

oil th e agricvtUural

sector

through

employment

-

driven and

positive

migration

,

(

73

Increased

vocational

employment

(

carpentry

,

repairs

to

cars/scoorers/

TWiiiobllcs

,

gardening

,

etc

,

)

.

Inclusive

growth

would

also

require a

changed

perception

of

both

the

central

government

and

also

the state

governments

,

working

in

tandem

,

by

creating

an

‘

enabling

environment

’

fo r th e above

deliverables

,

Such an environ

mem

would

require

the

following

;

also

for

t

been

’

by

tbe

was

a

should

r

morf

Ibus

.

seen

*

s

through

.

fair

.

»

>

*

(

1

)

Pan

India road/rail links whichwould link

the

entire

country

and

provide

accessibility

and affordable

faster

mode

of

transport

for

people

and

goods

.

(

2

)

Providing accessibility

and

affordability

to

public

services

(

primary

health

care

and

education

)

,

public

utilities

electricity

,

drinking

water

and

sanitation

)

and

public

goods

(

social

assets

like

community

centres

,

etc

.

)

.

3

)

Re

-

energizing

the Industrial

Training

Institute

(

ITIs

)

for

skill

development

,

(

4

)

Policy framework

conducive

for

investment

by

private

sector

(

something

like

Tata

Motors for

their

NANO

car

project

in Gujarat

),

(

5

)

Focus

on

directly

creating

employment

opportunities

. The

government

has

already

launched

Mahatma

Gandhi

National Rural

Employment

Guarantee

Scheme

,

which

provides

employment

for

100

days

to

one

member from

every poor

family

/

household

in

every district

of the

country

.

the

creation

of

the

enabling

environment

by

the

govern

mem is a

key

prerequisite

,

which

would

largely

determine

India

s

ability

to achieve inclusive

growth

in

future

.

Growth

and

development

or

inclusive growth

ha s

always

been an

avowed

objective

of

the

government



.

*

THE

INDIAN

ECONOMY

since

independence

-

Ihe difference

today is not

in

the

objective

but the

manner

in

which

it

is

being

sought

to

be

achieved .

Earlier

,

the

government

had

raken

tipT

both

the

responsibilities

of

increasing

growth

and

equitable

distribution

,

and

spread

scarce resources

across hoth

resulting

in

the

dilution

of efforts

and

achieving

neither growth nor equitable

distribution

.

The reforms

of 1991

mark

a

change

in

the

straregy

of letting

the

private

sector

play

a

major

responsibility

in the

investment

and

growth

while

on the ocherhand

the

government

would

concentrateon the welfare

measures

and create

the

e

n

ab

I ing

environ

meat I

OT

desired

inclusive

growth of

the

economy

in

future

.

This

is

also based

on the fact

rhat

more

and

better

growth

by

the

private

sector would mean

larger

tax

revenue base for the

government

which

would enable the

government

in expanding

the social

sector interventions

as

a

way

of

redistribution

to the

people

.

Inclusive

growth

is

not a new

concept

and is said to be

a

combination

of both ,

what

was earlier known

as growth

,

development

and

equitable

distribution

,

all

rolled

into a

new

terminology known

as

inclusive growth

,

specific

and

unique

to

India.

fn

future

,

the

challenge

would

lie

not

in

achieving

a

higher

growth

but to

provide

greater

industry

,

more

broad

-based

,

which

benefits

the

masses

.

Inclusive

growth

was

a

challenge

as

identified

by the

eleventh

five

-

year

plan

only

to

become

a

larger

challenge

in

the twelfth five

-year

plan

.

<

At

|

dev

is

1

inc

plai

ma

anc

to I

to

1

wh

;

the

i

(

K

<

of

It

a

sols

con

sh o



r

ich

th

n

y

a

d

t

v

C H P

T E R

O

SUS

T I

N

LE

V

L O PM

N T

AN

D

R N

G

DP

a

in

j

SU

ST IN

LE

DEVE

LOPM

ENT

At

proem

a

tew

new

icimino

logics

are

also

b

eing

used fo r

economic

s

such

as

sustai

nable

development

and

green

GOP

Sustainable

development

’

is a

global

terminology

which

is

be

ing

mod

to

address the

global

issues

of

global

warming

,

environm

ental

aspects

,

incre

ased

gloh

il

pol

lution

and

ecologica

l

im

balances

,

which arc

critical

fo

r

surviva

l

o

f

plan

et

ear

th and

is

thus

a

broade

r

concept

not

relating

to

any

on

e

count

ry

but for the

world

as a

w

hole

.

It

is

neither

the

prob

lem

of one

c

ountry

nor

can

it

b

e solved

by

on

e

coun

try

It

is

m

ore

macro

in nature

,

w

hich

requi

res

to

beadd

ressed

b

y

countries

collective

ly

t

hrough

a

dialogue

and a

c

onsensus

building

at

a

global

pla

tform

Ibis

is a

hunt

the

present

genera

tion

’

s

ability

to meet

’

its

ow

n

heeds

bu

t

without

com

promising

on

the abil

ity

of

the

future

gener

ation

to

meet

‘

its

’

needs

t

is

ilnuit

a

better

environment

for the

future

generation

rather than

w

hat

the

present

generat

ion

has inherited

to

say

the

leas

t

not a

worse than

that

inherit

ed

E

ven

though there

has

be

en

a

conscio

usness

on

the issue of

sustain

able

developm

ent

th

e

real th

rust

wa

s

provided

w

ith

the Earth

Summit

du

ring

1992

an

d

the

n

throug

h

various

in

ternationa

l

con

ventions

.

All

th

e conv

entions

m

entioned

so far

hav

e

flagg

ed

the

underly

ing

issues

esp

ecially

that

of

r

eduction

in gre

enhouse ga

ses

emission

,

which

is cr

itical for

s

ustainable d

evelopme

nt.

It also

ad

dresses

areas

of

c

leaner

energ

y

reduction

in

biodiversi

ty

losses

tree

planta

tion

solar

/

wi

nd

ener

gy

a

nd

other

such

glo

bal

iss

ues

i

n

sustainable

dev

elopment

It

is

not

about

flagging

of

issues

which

is

important

in

as

much

as

the

need

for collective

consensu

s

But

the

redu

ction

level so

arr

ived

through

consensus

for

different

countries

sho

uld

b

e

adher

ed

within

the

pres

cribed

time

lines. This is the

p

roblem

area of

a

sharp

divi

de between the rich

count

ries

and

the

cou

ntries

such

as

Indi

a

an

d

Chi

na

of achiev

ing

a

b

road

based

s

elf

imposed

red

uction

levels

w

here

eac

h and ever

y

convent

ions

have

been

failed

ll

the

rich

c

ountries

have

failed

to

m

eet

the deadline

s

repeated

ly

on all t

he m

ajor

is

sues

but most

importantl

y

on CiH

S

emission

reductio

n

le

vels

.

India

on

the

other

han

d

has

be

en

more

forth

right

in

its

approa

ch

a

lready having

low

levels of such

emissio

ns

an

d

the

projecte

d

level

of emi

ssions

even

by 2

031

lower

th

an

the

gl

obal

average

of

2005

Its

progres

s in

clean

er

n

r y

solar and wind

energy and

the

tree

pla

ntation

is

com

mendable

.



TH

E

I

N D

IA

N

EC

O

N

OM

Y

H

ow

ev

er

th

ere

a

re

lar

ger

is

sue

s

for

I

nd

ia

T

he

w

or

ryi

ng

fa

ct

o

f

t

he

inc

rea

sed

g

row

th

,

e

xpa

nd

ing

si

ze o

f

ou

tpu

t

s

till

has

m

il

lio

ns

of

p

oor

p

eop

le

liv

ing

b

elo

w

U

S

1

p

er

day

and

In

di

a

b

ei

ng

h

om

e

to

th

e

lar

ges

t

n

um

be

r

of

po

or

pe

op

le

in

the

w

o

rld

is

v

ery

d

is

tu

rbi

ng,

Poverty and sustainable

development

can

not be

divorced

from

each

other

.

The

in

cre

as

in

g

n

um

be

r

of

slu

ms

wi

des

pre

ad

a

bse

nce

of h

ygi

en

ic

san

ita

tio

n

p

iti

abl

e

li

vin

g

c

on

di

tio

ns

co

nti

nue

d

use

o

f

pl

ast

ics

an

d pol

lut

ed

riv

ers

are

all

an

int

egr

al

p

art

o

f

s

us

t i

n

le

de

ve

lop

m

ent

so

fa

r as

In

dia

is

c

on

ce

rne

d

.

Q

G

R

EE

N

G

D

P

Gr

een

GD

P

ref

ers

to

a

national

accounting

s

ystem

o

f

the

uti

liza

tio

n

o

f

t

he

no

n

-

ren

ew

le

n

atu

ral

res

our

ces

of

any

cou

ntry

a

nd

is no

w

bei

ng

e

nv

isi

on

ed

as

a

pa

rt

o

f

su

sta

ina

ble

d

ev

elo

pm

en

t

Th

e

ob

jec

tiv

e

is

to

u

til

ize th

e

res

our

ce

s

opt

im

all

y

,

e

ffi

cie

ntl

y

an

d

e

ffe

ct

ive

ly

in

fur

the

rin

g

th

e

g

row

th

of

ec

ono

mi

es

an

d

t

the

sa

me

tim

e

a

rea

liza

tio

n of

th

ei

r

s

ca

rcit

y

va

lue

.

It is

als

o

b

eli

eve

d

tha

t s

uch

an

acc

ou

ntin

g

w

ill

a

lso

p

av

e

the

wa

y

f

or

gre

ate

r

R

D

fo

r

dev

el

opi

ng

v

ia

ble

alte

rna

tiv

es

to

the

f

ast

de

ple

tin

g

n

on

ren

ew

ab

le

n

atu

ral

r

eso

urc

es

o

f

th

e

co

untr

y

.

C

lea

rly

t

he

big

ge

st

is

sue

is

th

at

o

f

a

bso

lu

te

po

ver

ty

w

hi

ch

ha

s

to

b

e

add

re

sse

d

in

pri

or

before

one

can

talk

about broader

aspects

of sustainable

development

.

This

not to

say

that

In

di

a

s

ho

uld

n

ot

add

res

s

th

e

iss

ue

of

su

sta

in

abl

e

d

ev

elo

pm

en

t

bu

t

a

dd

res

sin

g

t

he

nee

ds

of

th

e

p

oo

r

i

s

un

qu

es

tio

nab

ly

th

e

p

rio

rity

o

f

g

iv

ing

th

em

th

e

me

ans

o

f

li

vin

g

a

nd

a

hy

gie

nic

dec

en

t

liv

in

g

s

tan

da

rds

.

Th

us

,

in

clu

siv

e

gro

wt

h

su

sta

in

abl

e

d

eve

lo

pm

en

t

an

d

gr

een

GD

P

a

re

a

ll

d

iff

ere

nt

t

erm

in

olo

gi

es

tot

ally

di

stin

ct

f

ro

m

eac

h

o

th

er

i

n

t

he

ir

me

an

ing

b

ut

cann

ot

b

e sai

d

to

b

e

i

nd

ep

end

en

t

b

ut

i

nte

r

-

re

lat

ed

in

t

erm

s

of

th

ei

r

i

mp

lic

ati

ons

.



w

th

a

nJ

i

ng

si

ng

o

n

s

a

bJ

c

a

b

lc

a

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e

ive

ly

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it

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D

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,

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ic

,

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I

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R

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R

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P

ov

er

rv

is de

fin

ed

a

s

th

e

m

ini

m u

m

ba

si

c

c

on

su

m

pt

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l

ev

el

e

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en

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l

for s

ur

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l

It

ha

s

be

en d

ef

in

ed

by

i

hc

P

la

nn

in

g

Co

m

m

iss

io

n

of

In

d

ia

i

n te

rms

of

c

alo

ri

e

in

ta

ke

A

bs

olu

te

poverty

is

a

condition

,

where

the

caloric

intake

is

less

than 24

kcalories

per person

per

d

a

y

in

ru

ra

l

ar

ea

s an

d

2

k

ca

lor

ies

p

er

p

ers

on

p

er

d

ay

in

u

rb

an ar

ea

s

T

he

W

o

rld B

an

k

h

as

c

oi

ne

d

it

s

o

wn un

iv

ers

a

l

de

fin

itio

n

of

pov

ert

y

lev

el

s

as

p

e

r

p

ers

on

c

on

su

m

pti

on

of

les

s

tha

n

US

S

i

pe

r

d

ay

R

ela

tiv

e

pov

ert

y

is

acr

os

s

d

iff

ere

n

ce

in

in

co

m e

lev

els

of

the

ric

h

a

nd

t

he

re

lat

ive

p

oo

r

.

E

ve

n by

th

is

cru

d

e de

fin

itio

n

o

f

Pla

n

nin

g

C

om

m

is

sio

n

of ab

so

lu

te

p

ov

erty

,

it

is

e

sti

m

ate

d

th

at

ov

er

23

m

il

lio

n pe

o

ple

arc

liv

ing

be

low

po

ver

ty

lin

e

B

P

L

A

cc

o

rdi

ng

to

th

e de

fin

itio

n

o

f

W

o

rld

B

an

k

th

e

nu

m

be

rs w

o

uld inc

re

as

e

sig

ni

fic

an

tly

In

di

a

is

sa

id

r

o

h

av

e the

la r

ge

st

nu

m

be

r

o

f

p

eo

p

le

l

ivi

ng

B

P

L

Th

e

n

um

b

er

o

f

pe

op

le

BP

L

is

ev

en

m

ore

higher

than

the

entire

population

of

the US

.

Poverty

is

largely concentrated

in

states

such

as

U

P

Bih

a

r

,

O

ris

sa

M

P

,

We

st

B

en

ga

l

an

d

the

y

acc

oun

t fo

r

o

ve

r

5

pe

r

ee

nr

o

f

t

he

to

ta

l

po

ve

rty

in

In

di

a

.

D

es

pi

te

ov

er

s

ix

d

ec

ad

es

of ind

e

pe

nd

en

ce

,

wh

y

po

ve

rty

co

ntin

ue

s

to

e

xi

st

It

c

an

be at

trib

ut

ed t

o

th

e

la r

ge

ec

on

om

ic

de

p

en

de

nc

e

o

n th

e

a

gr

icu

lt

ura

l

s

ect

or

s

ub

sis

te

nc

e

tra

di

tio

na

l

a

nd

s

tag

na

tin

g

wh

ic

h

are

no

t

a

bl

e

to

pr

ov

id

e

e

no

ug

h

fo

r

th

e

de

p

en

de

nt

p

op

u

lat

ion

in

term

s

of em

pl

oy

m

en

r

o

pp

or

tun

iti

es

hi

gh

le

ve

ls

o

f

a

du

lt

ill

ite

rac

y

,

la

rg

e

n

um

b

er

of lan

dl

es

s

,

s

m

all

an

d

m

a

rg

in

al

fa

rm

e

rs

w

it

h

n

o

in

co

me

s

upp

ort

.

T

he

re

is

ab

se

nc

e

of

e

m

plo

ym

e

nt

op

p

ort

un

itie

s

in

the

m

an

uf

ac

tu

rin

g

s

ecto

r

.

It

is

n

ot

about

how

pov erty

is

measu red

crude

or

refined

It

is

the biggest

curse

of

post

in

de

pe

n

de

nc

e

I

nd

ia

of

no

t be

in

g

ab

le

t

o

a

dd

re

ss

the

lar

ge

s

c

le

p

ov

ert

y

in

t

he co

un

try

de

sp

ite

th

e

we

ll

in

te

nd

ed

sc

he

me

s

as

ca

n

be

s

ee

n

i

n

t

he

f

oll

ow

in

g

s

ec

tio

ns

E

S

O

I

L

S

E

TO

R

S

o

cia

l

sec

tor a

nd

p

ov

erty

ar

e

in

te

rre

la

te

d

a

s

i

t

la

rg

e

ly

c

om

p

ris

es

o

f

r

ho

se

B

P

L

an

d

a

ls

o

tha

t

s

eg

me

nt

o

f

th

e p

op

ul

ati

on

w

h

ich

i

s

ou

ts

ide

th

e

ma

in

str

ea

m

o

f d

ev

elo

p

me

nt

w

h

ich

c

on

sis

ts

of

the

un

de

r

p

ri

vil

eg

ed

al

wa

ys

at

th

e

r

ec e

iv

ing

e

nd

po

or

ba

ck

wa

rd

c

las

se

s

a

nd

s

ch

ed

ul

ed

c

aste

s

/

trib

e

s

.

I

t

wi

ll

als

o

h

av

e

landless

,

small and marginal

farmers

who

are



Iffl

THE

INDIAN

ECONOMY

engaged

in

casual

work

in

the

informal

sector

,

living

virtually

on

a

daily

basis

.

Ihcy

a

,

c

the most vulnerable

section

prone

to

exploitation

,

domination

and

do

not

have

any

v

&

i

^

or

can

also

be known

as

'

silent

sufferers

'

or

a

mere

spcaator

'

to their pitiable

ami

pad

^

condition

oblivious

of

die

fact

that

India

is

today

one

of

the fastest

growing

economics

One

has

already

seen earlier

,

why

this

has

happened

.

Hut what

has

the t

lovcrnntem

done

about

this

?

It

has

adopted

a

three

-

pronged

strategy

to

address

the social

sectors

wllic

are as follows

:

(

1

)

Broad

Targeting

;

(

2

Narrow

Targeting

:

13

Social

Security

,

Broad

Targeting

Under

broad targeting

the

Government

has

two

ambitious

programmes

,

Hirst

is

the Bharat

Nirmart

(

2005

-

2010

)

which

ha

*

six sub

-

programmes

:

(

1

)

irrigation

—

to bring

an

additional

1

crorc

hectare

under

irrigation

facilities.

(

2

)

Rural

road connectivity

—

covering

al l

villages

with

population

more rhan

10

M

and

villages

in

hilly

and

tribal

areas

with

population

more than

500

.

(

3

)

Indira

Awas

Yojana

—

building

6

million houses

for the

poor

(

4

)

Potable water

—

providing

with

drinking

water

in

55

,

065

new habitations

5

)

Rural electrification

—

electricity to

1

,

25

,

000

villages

benefiting

223

million

households

.

(

6

)

Rural

telcphon

y

—

p

novi

di

ng

teiepho

ne

co

n n

ec

t

ion

to

66

,

8

22

vi

IJagcs

.

Second is ihc

programme

of

the UPA Government

,

which has

eight

ambitious

flagship

schemes:

(

1

)

San

a

Siksha

Abhiyan

—

all children

in

rhe

age

group

of

6

-

14

years

to be enrolled

in

school

by

2010

(

2

)

Mid

-

day

Meal scheme

—

provision

of one

wholesome

full

meal

to

the

children

in

school.

Ibis

is to

meet

both the

objective

of

malnutrition

amongst

children

and

also

to

give

a

boost to

the enrolment

ratio

in

schools

.

(

3

)

Mahatma

Gandhi

National

Rural

Km

ploy

merit

Guarantee

Scheme

(

MGN

REG

A

)

.

(

4)

Total Sanitation

Campaign

(

5

JawaharlaJ

Nehru

National

Urban

Renewal

Mission

(

JnNURM

)

.

6

)

Integrated

Child

Development

and

Services

ICDS

)

,

(

7

National

Rural

Health

Mission

(

NRHM

)

.

(

S

)

Rajiv

Gandhi

Drinking

Water

Scheme

.

Of all

the

above

,

the

Mahatma

Gandhi

National

Rural

Employment

Guarani

*

Scheme

MGNRtGA

)

is the

most

ambitious

project

of the

government

which

is

being

implemented

at

thd national level and

of

magnitude

not seen

anywhere in

the

world

.

It

h

the

brain

child of

Jean

Drezc

.

a

Belgian

economist.

This

scheme

has

now

been enacted

and

guarantees

unskilled

wage employment

of

100

days

TO one

person

in

every

rural

household

oovmy

AND

S

al

a

dnlmum

wage

vtMvmi

of

agrfcultui

dw

country

and

Is

,

l

»

poverty

al leviad

this

scheme

,

whid

hy

the

Gram

[

>

anc

provided

with the

(

allowance

of

one

-

1

rhcir

registration

,

schemes

for the

so

Critics

o

f

th e

*

fWl

{

>

y

pushing

u

urban

arras

,

advc

fuelling

iiiflatiOI

)

Narrow

Target

The

government

0

)

Wage Empk

(

2

)

Self

Emp lo

Yogana

SC

S SRY

m

D

)

hood

secur

citizens

.

Social

Securi

ftc

government

(

J

)

Aani

Adn

,

where one

premium

remaining

f or

natural

chi ldren

ol

quarter

.

(

2

)

Uni

versa

]

^

ng

impl

this

s

year

,

per p

i nd iv idua l

f ami l y

of

(

3

)

Janashrce

I

Insunukca

I



OM

Y

hey

aF

e

y

vu i

Cc

at

hed

c

m

ies

rn

m

nt

w

hich

Rha

ra t

I

0

a

nd

il

lion

I

ship

d

in

in

d

also

A

.

m

e

e

ing

It

is

and

ho

l

P

V R

TY

AND

SO

CI L

SECT

OR

|

at

a

minim

um

wage

.

T

he

1

00

day

s

empl

oyme

nt

un

der

this

sc

heme

is

visua

lized

in

t

he

lea

n

seaso

n

of

agr

icultu

ral

activi

tie s

.

This

s

chem

e is

bei

ng

i

mple

ment

ed

in

all

the

di

stricts

of

th

e

co

untry

and

is

see

n

a

s a

m

ajor

step

in

creati

ng

th

e

em

ploy

ment

op

portun

ities

a

nd also

for

p

overty

al

levia

tion

in

the

cou

ntry

.

Wo

men 3

re

give

n

pr

efere

nce

for

em

ploym

ent

und

er

this

s

chem

e

whic

h

has n

o

m

iddlem

en or

co

ntracto

r

and

dir

ectly

be

ing

imple

men

ted

by

the

G

ram

Pan

chay

ats

an

d

the

wage

s

art

pa

id

in

the

bank

a

ccount

of

thos

e

wh

o

ar

c

provided

with

the

employment

The

state

gover

nment

s

are

required

to

give

unemployment

a

llowa

nce

of o

ne

thir

d

of the

w ge

s

if not

ab

le to

pro

vide

emplo

yme

nt

with

in

15 day

s

of

the

ir

regis

tratio

n

.

This

sch

eme

has

been

glo

bally

lau

ded

as

one

o

f

t

he

most

w

ell int

ende

d

sche

mes

for the

socia

l sector

a

nywh

ere

in

the

wo

rld

.

C

ritics

of

the

sch

eme

,

ho

weve

r

feci chat

s

uch

a

sc

hem

e

co

uld be

dama

ging

in th

e

lon

g

r

un

b

y

push

ing

u

p

th

e

min

imum

wage

s

and

incre

ase cost

in

r

he

agric

ultur

al

as

w

ell as

ur

ban

ar

eas

a

dve r

sely

af

fect

p

rodu

ctivity

and

also

pr

event

mig

ration

of

lab

our

bes

ides

fuellin

g

in

flatio

n

Narrow

Target

ing

The

g

overn

ment

is

at

tempt

ing

narro

w

targe

ting

which are

a

s

fo

llows:

1

Wa

ge

Emp

loym

ent

Sche

me

—

p

rimar

ily

throu

gh

Ma

hatm

a

G

andhi

NR

EGA

2

Se

lf

E

mplo

ymen

t

S

chem

es

—

p

rima

rily

throu

gh

S

wara

n

jay

anti G

rame

en

Sa

h

rozga

r

Yog

ana

SG

SY

in th

e

ru

ral

area

s a

nd

t

hrou

gh

Swa

ran

J

ayan

ti

Shah

ri

ozg

r

Yo

gana

S

SRY

i

n

the

u

rban

are

as

3

Food

secu

rity

—

prima

rily

thr

ough

TP

DS

AAY

,

An

napur

na

Sche

me

for

senio

r

c

itizen

s

.

S

ocia

l

Secu

rity

The

gov

ernmen

t

is

p

rovi

ding

so

cia l

sec

urity

unde

r

its

variou

s

prog

ramm

es

such as

:

1

A

am

Adm

i

Bima

Yo

jana

:

This

sch

eme is

targe

ted

at

the

r

ural

l nd

less

h

ous

ehold

s

w

here

one

earnin

g

mem

ber

w

ithin

the

ag

e

grou

p

of

1

8

39

year

s

is insu

red

at a

pr

emiu

m

of

T

200

per

y

ear

born

e

50

per

ce

nt

by

the

cen

tral

gove

rnmen

t

an

d

th

e

rem

ainin

g

50

pe

r

cent

to

b

e bor

ne

b

y

th

e

state

go

vernm

ents

.

T

he

cover

age

is

?

30

000

for

natural

death

and

?

75.0

OO

in

case

of

ccident l

death

As an

additional

incentive

,

child

ren of

the ins

ured

stud

ying

o

f

t

he

c

lass

9

-

1

2

wo

uld

g

et

scho

larsh

ip

of

?

30

G

per

qua

rter

2

Uni

versa

l

He

alth

In

suran

ce

S

chem

e

UH

IS

:

Th

is

sch

eme o

f

rhe Gove

rnme

nt

is

bein

g i

mple

men

ted by

th

e Ori

enta

l

In

sura

nce

Co

mpa

ny

aim

ed

a

r

BP

L

fa

milie

s

Th

is

s

chem

e

p

rovid

es

c

overa

ge

of

h

ospit

aliza

tion

expe

nses upto

T

30

,

000

p

er

ye

ar

,

p

er

pe

rson

insur

ed

und

er

th

e sch

eme

.

T

he

prem

ium

i

s

?

16

5 per

an

num

for

in

divid

uals

?

2

48

per

ann

um

for

a fam

ily

o

f 5 me

mber

s

a

nd

?

330

p

er

an

num

for

3

fa

mily

of

7

m

embe

rs

3

Jan

ash

ree

Bim

a

Y

ogan

a

JBY

:

Th

is

s

chem

e

is

being

impl

emen

ted

by

the

Life

In

sura

nce

Corp

oratio

n

of

Indi

a

L

C

aim

ed

at

BPL

fam

ilies

p

rovid

ing

in

su ran

ce



POVERTY

A N D SOCIAL

SECTOR

D

insured

natural

of

th

«

for

i

}

0

T

provided

earlier

,

noi

that

they

arc bound IO

succeed

,

but

will

display

the

attitude

of

the

government

of

willing

to

experiment

to find Jong

-

lasting

solutions EO the

vexed

problem

*

.

Ih c

government

has

TO

keep

in

mind

that it

is not the

resources

which

matter but

in

their

efficient

spending

,

technology

-

enabled

monitoring

mechanism and

being

on the

learning

curve

each

year

,

reorienting

and

successfully

addressing

die

needs

of the

social sector

Lei

us also

admit

that

the

task

is

daunting

but

it

has to be

accomplished

one

way

or

the

other

,

a

major

challenge

for

the

governments

both the

centre and

state

collectively

.

argered

BE

M IC RO F IN A NC E

their

but

a

strict

not

for

the

sector

,

fo r

the

,

overlap

could

be

done

the

’

ienrcd

t

to

the

of

better

nd

will

and

no

*

of

the

and

tangible

beet

1

Given

that social sector

do

not

have access to

organize

sounxs of

finance

say

through

bonks and

also

given

their on

tensive

paper work

,

Cumbersome procedures

,

documentation requirenieni

-

the

micro

credit

institutions

are

today

seen

as

offering a

solution both for

the

social

sceior

as

well as

addressing

the

issues

of

poverty

These institutions

,

as

a

concept

have

their

genesis

in

Bangladesh

,

pioneered

by

Mohammed

Yunus

, for which

he

was

awarded

the

Nobd

Prize

,

as

successful

institutions for

reaching

out to

the

last Unit

of

any

economy

not

possible

through

banks and

directly

contributing

to

the

uplift

of the

poor

especially

rural

women

In

India

,

the SHG movement starred

in

1992 under

NABAJLD and with involvement

of

banks

Under

the

SHG

scheme credit is

linked to

savings

by

focusing

on

capacity

building

,

with

low interest rates

usually

8

-

10

per

cent

with

monthly

repayment

but

responsibility

of the

group

and not

individuals

SHGs

in

India cover

90

million

poor

households

and have extended

credit of

over

T2

5

,

000

crorc

Micro Finance

Institutions

(

MFIs

}

are institutions

which

provide

credit

to the

poor

but

at a

high

interest

rate but lower than

that

charged

by

the

money

lenders

MFIs

in

India

have

engaged

the attention of the

government

only

since

2003

and

in

the Last

7

years

,

have seen

an

exponential

expansion

to reach

30 million

and

credit

of over

?

30

,

000

crorc.

These

have been seen

as

partnering

SHGs

in

micro

finance

in

India

and also

a

major

way

through

which the

country

could

provide

‘

financial inclusion

that

is.

to

provide accessibility

to

organized

sources

of finance

to the

poor people

and reduce their

dependence

on

the

money

lenders

for their

income

generating

activities

enabling

them to

have source of income

,

employment

and also

get

out of

poverty

.

However

,

in

recent

times

,

MFIs

especially

in Andhra

Pradesh

,

have

given

a

new

dimension

and

raised the

following

fundamental

issues:

1

)

Their

prime

motive is to earn

profits

through

high

profit

margins

by

charging

high

interest rates but

slightly

lower than

that

charged

by

the

money

lenders

(

2

)

MFIs

have reached

out

to

those

ignored

by

the

banks and

also the

fact

they

are

not

complementing

the

efforts

of

the

banks

There

is

sizeable

concentration

of MFb

in

areas

where there is

banking

penetration

.

(

3

)

MFIs

are

finding

softer options

of

lending

like SHGs

,

which leads

to

multiple

financing

,

debt

burden

on the

borrowers

4

)

MF1

are

aggressive

and

are

more consumer

-

oriented

loans

,

Jess

productive

-

oriented

,

similar

like

a

private

bank

selling

consumer

Joans

or

the

US

banks

lending

to

sub

-

prime

borrowers



T

H

IN

D

IA

N

O

N

O

M

Y

h

es

e

de

v

elo

p

m

en

ts

ha

v

e

fo

rc

ed

th

e

go

ve

rn

m

en

t

t

o

re

th

in

k

o

n

thi

s

m

od

e

l

o

f

fi

n

n

c

i

l

nc

lu

si

on

a

n

d

ad

d

in

g i

n

p

la

ce

re

gu

la

ti

on

s

fo

r

th

e

M

F

I

H

o

w

ev

er

at

a

b

ro

ad

er

lev

e

l

an

d

to

p

ro

v

id

e

g

re

t

er

i

nc

lu

si

vi

cy

th

e

n

at

io

na

li

ze

d

n

k

s

re

better

placed

than

the

MFIs

through

innovative

means

such

as

the

correspondent

an

k

in

g

rou

te

w

h

ich

w

ill

ke

ep

co

st

s

lo

w

of

r

ea

c

hi

ng

ou

t

w

ith

o

ut

t

he

ne

ed

fo

r

m

o

r

r

an

c

he

s

M

i

cr

o

fi

na

nc

e

th

r

ou

gh

M

F

Is

w

o

ul

d

th

us

r

eq

u

ire

r

ed

e

sig

n

u

t

th

e

ir

g

re

te

r

o

m

pl

em

e

nt

ar

y

an

d

c

o

m

pa

ti

bi

lit

y

r

o

le

wi

th th

e

ba

n

ks

w

o

ul

d

h

av

e

t

o

b

e

e

x

pl

or

ed

to

m

a

k

e

th

em

as

e

ffe

c

tiv

e

in

sti

tut

io

ns

o

f m

i r

o fin

a

nc

e

i

n

I

nd

ia

S

oc

ia

l

s

ec

tor is o

ne

o

f

th

e

ke

y

sec

tor

s

o

f

the

e

o

no

m

y

n

d

re

ac

hi

ng

o

ut

to

th

m

nd

dr

aw

in

g t

he

m

in

to

m

ai

ns

tre

am of d

e

ve

lo

pm

e

n

t

i

s

th

e

bi

gg

e

st

r

es

p

on

si

bi

li

ty

o

f

t

he

government

as

only

then

th

e

biggest

transformation of the

e

co

no

m

y

w

o

ul

d

happen

y

br

in

gi

ng

al

l

ro

u

nd

pr

os

pe

ri

ty



ial

]

nks

ent

e

ter

ake

the

by

FOO

D

SE

CU

RIT

Y

Q

FO

OD SEC

UR IT

Y

The

first

aspec

t

of foo

d

s

ecurit

y

is the

d

omes

tic

a

vaila

bility

of food

gra

ins

N

o

coun

try

wo

uld

eve

r be

will

ing

to

dep

end

on

other

cou

ntries

fo

r their

re

quirem

ent

of

food

g

uilts

or

a

gricu l

tural

commodities

unl

ess

it

does

not h

ave

a

ny

other

option

Since

Independence

Indi

a

h

as

tra

velled

a

lon

g

way

tow

ards t

he food

securi

ty

,

fro

m

a

n

imp

orter

of

foo

d

guilt

s

,

w

hich has

no

w

achi

eved

‘

self

-

s

uffici

ency

’

in food

grain

s

th

rough

the

increa

sed

dom

estic

produ

ction

O

Buffe

r S

tock

o

f

F

ood

G

rains

Ind

ia

is on

e

am

ong

the

few

cou

ncries

in

the

worl

d

having

gover

nment

-

held

st

ock

of

foo

d

gra ins

,

for

the

following

reasons:

1

Buffe

r fo

r

me

eting

n

atural calam

ities

;

2

Price

s

tabiliz

ation

in cas

e of

crop

fa

ilures

;

3

)

Provi

ding

foo

d

gr

ains

unde

r

publi

c

distr

ibution

sys

tem

Th

e

g

overnm

en t

has

buffer

sroc

k norms

for d

iffere

nt

mo

nths

in

a

year

c

p

resent

,

the

maxim

um

s

tock of

the

f

ood

gra

ins

of w

heat

a

nd

ric

e a

re to be

held

b

y th

e

gover

nment

as

buf

fer

st

ock

is

mill

ion ton

nes

to

meet the afor

esaid

o

bjectiv

es

.

Fo

od

C

orpo

ration

of Indi

a

PC

I

)

ha

s th

e

prime

resp

onsib

ility

of

pr

ocurin

g

the food

gr ins

nd

the

procurement

is

done

at

minimum supporr

price

MSP

)

and

stored

in

its

w

areho

uses

at

d

ifferen

t

lo

cation

s

and

fr

om

ther

e

it

is

sup

plied

to

the

state

gov

ernmen

ts

in

te

rms

of

r

equire

ment

FCl

a

lso

s

ells

in

th

e

ope

n

m

arket ro

s

tabiliz

e

,

if

th

eir

prices

turn

v

olatil

e

esp

eciall

y

in

pe

riods

of

cr

op

failure

s

Certai

n

issu

es whi

h

ar

c a

round

bu

ffer stock

opera

tions

are

bri

efed

as

f

ollows

Firs

t

,

t

he

go

vernme

nt

is

curr

ently

holdin

g

ma

ny

mult

iples

more

than

that

re

quire

d

un

der

the

norms

of

arou

nd

ov

er

50

6 milli

on

ton

nes

even

whe

n

hig

her

stock

s

have

been

he

ld

in

t

he

p

ast

.

Why

do

es

rh

e

gover

nment

hold h

igher

stock

s

tha

n

req

uired

?

It is bec

ause

of

th

e

MS

P

of

food

g

rains

and

also

the

procur

ement

pric

e

;

a

nd

at

that

price

go

vernme

nt

is

mandatorily

required

t

o

procu

re

whatever arrives

to

FCI

If

there

is

a

bumper

crop

FCl

will

ha

ve

to

pr

ocure

t

he entire

s

tock

.

Ev

en

if

t

he

m

rket

pri

ce

of

the

foo

d

g

rain

is



AGRICULTURE

SEC

C H A P T E R

O

AGRICULTURE

SECTOR

I wii

'

W H Y

'

IS

AGRICULTURE

SECTOR

IMPORTANT

FO R

INDIA

?

inflation

climbing

ovc

inflation

will

hurt

all

l

Agriculture

sector

ti

il l

only

keep

on

inci

factors

and

others like

Realizing the

impor

the

’

Green

Revolution

wheat

and

other

cereals

(

HYV

)

seeds

.

This

wa

measured applications

t

The

success

story

was

r

assured

/

adequate

water

Western

Uttar Pradesh

.

However

,

it

was

me

of

wheat

Muchof

the

:

In the previous

section

,

we had dealt

about

agriculture

sector

which

has

about

60

per

cent

.

, ,

plus

population

-

dependence

,

an

aspect

which

has

been

there

since Independence

Thh

,

,

,

,

.

1

1

.

. ,

,

.

.

,

I

and thetr

relative

impo

sector

provides

us with

food

security

and

raw

material

tor

in

an

u

taemnng

sector

.

Each

and

every

country

would

like to

be

self

-

sufficient

for

its

requirements

of

food

grains

,

pulses

,

sugar

,

edible

oils

.

milk

fruits

and

vegetables

.

White

Revolution

(

Yellow Revolution

(

India has the

largest

number

of

villages

of

over

6.00

,

000

.

Majority

of

our

population

I

*

Blue

Revolution

(

m

Golden

Revolution

esides

in

villages

.

No

other

country

has

so

many

villages

.

India

’

s

agricultural

sector

is

characterized by

traditional

,

subsistence

and

livelihood

[

*

Golden

Fibre Rcvol

rain

fed

farming

,

food

grain oriented

,

lacking

in

diversification and

commercialization

.

*

Silver

Fibre Rcvolut

Over

80

per

cent

of

the farmers

are

landless

small

and

marginal

farmers

with

cultivation

j

’

Brown Revolution

I

for

consumption

and

little

diversification

Agricultural

finance

is

informal

with

triunce

I

Morenxendy

.

Rainbow

on

the

money

lenders

.

It

is

said

about India

that

majority

of

our

economic

issues

aft

)

floriculture

,

plantation

<

primarily

of

poverty

and

unemployment

and

both

the

problems

and

their

resolution

lie

India

is

one

among

t

in

the

agricultural

sector

.

under

cultivation

and

Pt

There

is

enough

literature

assailable

on

agriculture

in standard

text

hooks

on

Indian

I

major

crops

which

is

no i

Economy

.

Ir

would

be

suffice

to

say here

that

the

key

issues

in

agriculture

are

to

increael

prices

.

It

is

not

sufficient

production

through

distinct

improved

productivity

.

ginger

,

turmeric

,

pepper

,

I

rice

,

wheat

,

ground

nut

1 domestic

demand

and

pi

Why

i

Productivity

Important

?

ifidia

«

b

]

c

scd

wilh

I

In

the earlier

years

production could be

increased

bv

bringing

in

more

and

more

bo

*

|

rural

pmducrio

under

cultivation

without

addressing

productivity

.

However

,

today

all

available

arable

I

diflerermaior

between

In

Whkh

~

~

-

*

—

*

•

-

d

L

W

ith

the

increasing

population

increased

incomes

especially

of

the

poor

in

At

would

increase

the

demand

for

agricultural

products

manifold.

What

should

product

^

does

no t

increase

?

It

would

mean

’

supply

not

sufficient

tor

demand

would

result

m

increased

prices

of

food

items

.

Z

happened in 2000-

2010

domestic

needs

.

Food

gr

tonnes

of

which

wheat

h

*

is

an

urgent

requirement

increased

productivity

H



AGRICULTURE

SECTOR

‘

0

my

htiv

*

Mew

*

cent

;

And

,

.

ion

,

,

*

Cmp

diversification

.

commercialization

,

moving

up

th e

value

addition

chain

.

Intensification of

research and

should

ensure

their

effective

diiceminatiun

aiming

*armers

.

*

Agricultural

extension

service

which is

transmission

of

appropriate

technology

from

fab to land

,

has

virtually

collapsed

in

India

.

Less

than

1

percent

of

farmers

make

use

of

the

extension

services

f

Kris

hi

Vigyan

Kendra

)

Block

level

extension

services

are

not

equipped

with the

latest

advancements

in

Technology

There

is an

urgent

requirement

of their

integration

in

the

agriculture

sector

tt

>

dose th e

knowledge gap

*

Allowing

modern

science

,

biotechnology

,

organic

farming

to

be

blended within

the

agriculture

sector

*

{

farmers

to move

away

from

two

-

crop

cycle

to

shorter durarion crops

allowing

for

multiple

cropping

.

*

Stress

on

completion

ol

irrigation

projects

to

ge t

more and more land under irrigaiton

.

*

Increase both

on and off

farm

employment

.

Hocusing

on

rural

transportation

*

The farmer should

become the

fulcrum

and

efforts

made

m

improve

his

standards

of

living

and

in

his

prosperity

,

lies

the

prosperity

of

the

agriculture

sector

and

the

Indian

Economy

,

Dr

M

S

. Swamin at

ban

.

an

agricultural

economist

,

however

,

feels

that India needs

Ever

tlrecn

Revolution

'

for

long-

term

sustainability

. It cannot be

achieved

in

one shot but

Continuous shots at

improvingproduction

and

productivity

,

suitable blend of

(

he traditional

with modern

,

focused

on

locally

renewable

sources

of

energy

,

organic

farming

and

nuking

inputs

and

credit

available

to

the

farmers

,

as

fundamentally

more

important

today

.

Agrictilrure

sector

right

since

Independence

has

been a thrust area

,

with increased

investments

in each successive Jive

-

year

plans

,

but

problems

have

not

only

remained

unresolved

but

only

accentuated

over a

period

of time

with

large

-

scale rural

poverty

.

of

F

*

1

M

|

N

|

MUM

SUPPORT

PRICE

(

MSP

)

fa

51

*

^

The

government

announces

the

minimum

support

price

(

MSP

)

for

twenty

-

four

crop

*

including

rice

,

wheat

,

pokes

,

sugarcane

prior

to

harvest which is

to

say

that

the minimum

price

of

crops

in

th e

market

would

not

he

less

than

the

MSP

announced fo r the

cmp

Of

the

MSP announced

fo r

various

crops

,

the

government

through

Pood Corporacmn

of

India

,

as

discussed

in

an earlier

chapter

,

directly

procures

wheat

and

rice

for

meeting

buffer

stock

requirements

and

also TO

channelize

(

he

food

grains

to the

poor

through

various

government sponsored

schemes

.

For

(

he

remaining

crops

,

the

government

would ensure

a

price

which is

higher

than the

MSP in

the market

.

Fruits

and

vegetables

are

sold to

the

agriculture

produce

marketing

cooperatives

(

A

PMC

)

of

the

respective

state

govern

menu

,

which

also

fix

the prke

keeping

in

v

ew their

idative

cost

and

,

tko

ensure

the

farmer

obtains

a

fair

price

The

delivery channel

h

«

a

number

of

middle

men

who

retve

as

bottlenecks

and

responsible

for increased

prices

,

large

-

scale

hoarding

*

and

ibo

prevents

<

r

rmer

m

getting

benefits

of

increased

prices

.



A G

R

I

C U

L

T

U

R

E

SE

C

TO

R

c

,

h

ry

t

o

ll

-

er

e

i

d

k

;

n

nt

es

y

r

e

d

t

o

v

r n

m

n

t

ni

ti

ti

ve

s

t

z

z

s

s

x

z

i

x

s

F

n

it

a

nd

ve

ge

ta

ble

p

roc

es

sin

g

i

nc

lud

in

g

fre

ez

in

g

an

d

deh

yd

rat

ion

*

Gr

ain

pro

ce

ssi

ng

P

roc

es

sin

g

of

f

ish

inc

lu

di

ng

ca

nn

ing

an

d

he

rri

ng

.

P

ro

ces

sin

g

a

nd

.

efr

igt

rat

ion

o

f

ce

rta

in

a

gri

cul

tur

al

p

rod

uc

ts,

d

air

v p

ro

du

cts

,

pou

ltr

y

a

nd

eg

gs

mea

t

an

d

m

eat

p

rod

uc

ts

.

*

In

du

str

ies

tha

t

ar

e

r

el

ate

d

to

b

re

ad

o

ilse

ed

s

,

me

als

edi

ble

,

bre

ak

fa

st

foo

ds

,

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isc

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cti

on

ery

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xtra

ct

p

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is

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igh

p

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od

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a

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tru

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d fo

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ct

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in

cl

ud

ing

ot

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r

ea

dy

to

ca

r

foo

ds

*

Be

er

in

clu

di

ng

no

n

a

lco

ho

lic

bee

r

.

Alcoholic

drinks

from

no

n

-

m

ol

ass

es

ba

se

.

*

A

er

ate

d

wa

ter

and

so

ft

dr

ink

s

T

he v

isi

on

20

15

for

t

he

fo

od

pro

ce

ssi

ng

se

cto

r

aim

s

a

t

d

ie

fo

llo

w

ing

;

* E

nh

an

ci

ng

an

d

sta

bil

izi

ng

th

e

inc

om

e

le

vel

of

the

fa

rm

ers

Pr

ov

idi

ng

ch

oi

ce

to

c

on

sum

e

rs

in

t

erm

s

of

w

ide

v

ari

ety

a

nd

tast

e in

clu

di

ng

tr

ad

itio

na

l

eth

ni

c

f

oo

d

.

*

Pr

ov

idi

ng

gre

ate

r

as

sur

an

ce

in ter

ms

of

saf

ety a

nd

q

ua

lit

y

of

fo

od

t

o

co

nsu

m

ers.

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n

pr

om

oti

ng

a

dy

na

m

ic

f

oo

d

p

roc

ess

in

g

ind

us

try

*

Enhancing

the

competitiveness

of

food

p

roc

ess

in

g

i

nd

us

try

in

b

oth

do

m

est

ic as w

el

l

a

s

in

tern

at

ion

al

ma

rk

ets

To

est

ab

lish

th

e

fo

od

pro

ce

ssi

ng

sec

tor

attr

ac t

ive

f

or

bo

th

d

om

e

stic

an

d

fo

re

ign

in

ve

sto

rs

.

A

ch

iev

in

g

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rat

ion

of

the

fo

od

pr

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ess

ing

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nfr

as

tru

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fa

rm

t

o

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rke

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in

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a

t

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spa

ren

t

a

nd i

nd

us

try

f

rie

nd

ly

re

gu

la

tor

y

r

eg

ime

*

Ar

ran

gi

ng

in

p

la

ce

a

tra

nsp

ar

ent

sy

stem

of

s

ta

nd

ard

s

ba

se

d

on

scie

nc

e

.

Th

e

f

ol

low

in

g

sp

ec

ifi

c

tar

gets

ha

ve

b

ee

n

s

et out

fo

r

th

e

y

ear

2

01

5

:

*

In

cre

as

e

in

th

e

le

ve

l

o

f

pro

ce

ssi

ng

o

f

p

er

ish

ab

le

s

fro

m

6

to 20

per

cen

t

*

In

cr

ea

se

in

va

lu

e

ad

di

rio

n

fr

om

2

0

t

o

3

5

p

« c

ent

.

*

ha

re

in

g

lo

ba

l

f

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d

tr

ade

to inc

rea

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om

1

.5

to

3

p

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ent

.

A

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est

im

at

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est

me

nt

of

f

1

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.0

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cro

ies

is

r

eq

uit

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to

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hi

eve

t

he v

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on

of

w

hi

ch

4

5

,

00

0

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ses

is

ex

pe

ct

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te

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.

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45

.0

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^

:

:

;

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ru

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om

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ep

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:



ECONOMY

AGRICULTURE

SECTOR

to

d

^

j

.

forward

—

^

understanding

opportunities

a

seamlc

^

of

front

which

,

in

[

grated

assist the

small

.

So

for

,

facilities such

a

S

infrastructure

;

. It will

include

processing

will

1JL

Jem

,

ind

¬

environmental

,

realization

for

in

wastage

,

1

supply

chain

industry

,

primary

,

under the

based

environmental

of increased

away

ft

*

111

.

The

changing

food

market

*

market

and

b

s

become

of

*

-

S

»

rproau

„

i

„

,

Coemption

patterns

in

India

have

be

undergoing

a

visible

shift

,

ELarlfe

,

the

share

0

fcereal

products

was the

highest

,

followed

by

milk

and

milk

products

,

vegetables

alible

0

]

|

and

moat

products

.

However

,

in

recent

years

,

the

growth

rates

for

fruits

,

vegetables

meat

and

da

.

ry

products

have

been

higher

than

cereals

and

pulses

.

Thisshift

in

mm

implies

That

there

is also

a

need to

diversify

the

food

production

base

m

match

the

changing

consumption

preferences

.

This shift

in

consumption

follows

the

pattern

observed in

developed countries

in

the

evolution

of

the

global

food

demand

There is a

shift from

carbohydrate

staples to animal

sources

and

sugar

On

following this

pattern

,

in

future

,

there

will

he

increasing

demand

for

prepared

meals

,

snack foods and

convenience

foods and

further on

the

demand would

shift

towards

functional

,

organic

and

diet foods

these

an

?

post

-

liberalization

trends

that

have

given

an

impetus

to the

sector.

Some

Structural Issues

Farmers

have

a

limited market for their

agricultural

produce

which

arc confined

to the

local

‘

Msndis

’

,

and

are

governedby

APMC under the

respective

state

government

;

and

the

farmers

can

only

sell to them

They

cannot

sell

directly

to

the

private

parries

for

further

processing

.

As

a

result

,

they

are

denied better

prices

and

also

prevent

food

processing.

They

also

have limited information

about

the

marketfs

),

prevailing

prices

and

operate

within

their

limited

knowledge

,

based

on their own wisdom

The

supply

chain

of

agricultural

produce

from

the

farmer to the ultimate consumer

lacks

transparency

and

passes

through

a

number

of

middlemen

raising

cost

through

commission

charges

,

resulting

in

higher

prices

without

any

value addition

.

Further

,

the

absence of

storage

/

warehousing

facilities

and

an inefficient

transport system

results in

wastage

,

which

only

add

up

to

higher

prices

There is

virtual no

use made

of

even the available

technology

let

alone

leveraging

technology

in

the

entire

supply

chain

There

is

no

quality

control

and

testing

mechanism

for

agricultural produce

which

reaches

the

consumer

.

The

extent

of use

of

fertilizers

,

hygiene

aspects

and whether

they

are

safe

for

human

consumption

is

not

seen

as anyone

’

s

responsibility

,

Remedial Measures

Tbe

government

ha

,

taken

,

he

firs

,

Hep

by

allowing

.

he FOI

in

nnS

.i

-

bn

.

nd retailing

.

TO

the

food

processing

industry

.

This

will

ako

ensure

a

larger

part

.

cpt

.

on

P

H

'

CIOJ

.

rl

(

be

enrire

chain

.



T

I

N

I

N

O

N

O

M

y

H

o

w

e

v

e

r

t

h

is

s

e

ep

w

il

l

re

q

u

ir

e

a

c

ri

ti

c

a

l e

n

a

b

l

e

r

t

h

a

t

o

f

am

e

n

d

i

n

g

to

th

e

re

s

p

j

^

P

M

ac

t

o

f

t

h

e

re

s

p

e

c

ti

v

e

st

at

e

g

o

v

er

n

m

e

n

ts

.

T

h

is

a

m

e

n

d

m

e

n

t

w

i

ll

a

ll

o

w

fa

r

m

e

r

s

d

ir

e

ct

l

y

t

o

th

o

s

e

in

t

e

re

s

t

ed

i

n

f

o

o

d

p

ro

c

e

s

s

in

g

w

h

ic

h

al

l

o

w

p

ri

vate

sector

to

set

up

yards

for

pi

c

k

i

n

g u

p

p

ro

d

u

c

e

fr

o

m

th

e

fa

r

m

e

r

s

.

It

w

i

ll

a

ls

o

o

p

e

n u

p

th

e

su

p

p

l

y

c

h

a

i

n

I

t

is

o

r

t

h

is

r

ea

s

o

n

th

e

c

e

n

tr

a

l

g

o

v

e

rn

m

e

n

t

h

a

s p

e

r

m

it

te

d

t

h

e

F

D

I

su

b

j

e

c

t

to

co

n

s

et

y

o

f s

ta

te

g

o

v

e

rn

m

e

n

ts

I

n

re

ce

n

t t

im

es

th

e

r

e

h

a

s

b

e

e

n

a

b

io

t

e

c

h

n

o

lo

g

y

re

v

o

l

u

ti

o

n a

n

d n

o

w i

s

t

h

e

ti

m

e

o

r

fo

o

re

v

o

l

u

ti

o

n

a

r

o

u

n

d

f

o

o

d

p

r

o

c

es

s

in

g

i

n

d

u

s

tr

y

a

n

d t

h

is i

s

t

h

e

re

a

s

o

n

w

h

y

th

i

s

i

n

d

u

s

t

ry

u

k

n

o

w

n

as

a

‘

su

n

r

is

e

in

d

u

s

t

ry

’

in

v

ie

w

o

f

i

ts

p

o

te

n

t

ia

l

it

y

I

n

d

i

a

b

e

s

id

e

s

m

e

et

i

ng it

s

o

w

n

o

o

n

e

e

ds

in

te

r

m

s

o

f

q

u

a

li

ty

d

i

v

er

s

if

i

ed a

n

d

v

a

lu

e

a

d

d

e

d

p

ro

d

u

c

t

s

is

a

ls

o

ca

p

a

b

l

e

o

f

e

x

p

a

n

d

i

n

g

t

o

g

l

o

b

a

l

m

a

rk

e

t

s

.

T

h

e

f

o

o

d

m

a

r

k

et

c

an

n

e

v

e

r

h

a

v

e

a

d

o

w

n

tu

r

n

li

k

e o

t

h

e

r

m

a

rk

e

t

s

i

i

is

driven

as

a

basic

necessity

and

the

demand

will

always be

there for

the

same

.

The

rea

l

c

h

a

l

le

n

g

e

w

i

ll

be

fr

o

m

th

e

s

u

p

p

ly

s

id

e or

t

h

e

a

b

il

it

y

to fe

e

d

t

h

is

g

r

o

w

i

ng

m

a

r

k

e

t

.

T

h

e

fo

o

d

pr

o

c

es

s

in

g in

d

u

s

t

ry

i

n

I

n

d

ia

h

a

s

o

n

ly

be

c

o

m

e

t

o

ev

o

l

v

e

a

n

d

h

as

th

e

c

a

p

ab

i

li

ty

o

f

b

e

c

o

m

in

g

th

e

f

a

st

e

s

t

g

r

ow

in

g s

e

ct

or

in

t

h

e

f

u

tu

r

e

w

it

h

t

re

m

e

n

d

o

u

s

o

p

po

r

tu

n

i

ty a

n

d

p

o

t

en

t

ia

l

b

u

t

a

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o

t

t

h

e

s

a

m

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ti

m

e

c

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ll

e

n

g

e

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r

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s

tr

u

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u

ra

l

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s

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i

m

p

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v

em

en

t

s

i

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su

p

p

l

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c

h

a

in

a

n

d

tr

a

n

s

fo

r

m

i

n

g

fr

o

m a

n

i

n

fo

r

m

a

l

to

a

f

o

r

m

a

l

s

ec

to

r

bu

s

i

n

e

ss

a

ct

iv

i

ty

C

H

P

o

n

t

m

p

t

s

y

st

e

m

la

la

n

d

a

n

d

l

a

r

g

el

y

w

ii

p

re

v

a

le

n

c

e

la

ndless

fa

T

h

e

o

fc

e

x

t

r

em

e

ly

i

n

t

a

n

d

em

T

h

e

to

i

I

n

d

ia

V

a

r

i

t

r

en

d

I

h

c

t

he

re

m

ai

f

i

n

c

lu

d

in

g

activities

ia

H

o

w

f

o

n

d

u

s

e

?

°

n

ly

1

7

p

«

P

b

u

t

a

r

e

a

u

nd

e

r

if

t

f

t

a

s

ic

r

u

c

i

T

i

m

is

im

p

ro

v

i

i

sector

im

P

o

p

u

la

t

io

n

b

e

d

ri

v

e

n



P

bad

^

.

consent

r ‘

food

^

n

food

as

it

lic

real

and

issues

,

l

sector

LAND

REFORMS

—

ANOTHER

PERSPECTIVE

LAND

REFORMS

—

ASPECTS

Contemporary

land reforms

in

India

addressed

aspects

such a

abolition

of

me

Zimmdarf

system

,

land

ceiling

act

,

reforms

in

tenancy

,

rights

of

tenants

redistribution

of

surphis

land

and

land

consolidation

These

have

been a

focus

area

right

HJVX

Ir

-

depersdence

,

largely

within

the

state

government

domain

The

}

*

continue

ic

be

*

priority

area

with

prevalence

of

a large

number

of

small and

marginal farmers

*

r

.

d

also

a

large

number

of

landless

farmers

Tlic

objective of

this

chapter

is

to

bring

out

a

new

perspective

which

has

become

extremely

relevant and

also

would

require

to

be

addressed

on

an

equal

important priority

in

tandem

with

the

requirements

of

the

economy

.

The total

area

covered

under agriculture

is

around

60

per

cent

of

die

land

area of

India.

Various

articles

mention

a

declining trend

of

area

under

agriculture

,

as

a

disturbing

trend

.

The

forest cover

of

India

is around 20

per

cent

,

unreported

around

5

per

cent

and

the

remaining

13 per

cent

as

mountains

,

rivers

and

also

for

non

-

agricultural

purposes

including industries

.

Thus

,

a

total

land

area

for

industrial

/

service

setior

/

infrastructurc

activities

is only 11

per

cent

.

How

much

of

GDP

is

accounted

by

various

sectors

of

the

economy

in

relation

to

the

land

use

?

Agriculture

consumes

up

to

60

per

cent

of

the land

area whereas

contributes

only

17

per

cent of

GDP

,

while

industrial

/

service

sector

contribute

over 80

per

ceaz

of

GDP

but

has

only

11

per

cent

of the land

area.

Growth

in

future

will

require

large

land

area

under

non

-

agriculture

for

industries

,

service

sector

activities

and

also for

building

infrastructure.

This

is

no t

to

undermine

the

importance

of

agricultural

sector

in

India

.

The

issue

hes

in

improving

the

agricultural

productivity

,

rather

than

the area

under

agriculture

,

Hid

^

tor

is

important

for food

security

and

also

for

meeting

the

requirements

of

a

growing

population

,

however

,

at

the

same

time

it

cannot

become

a

driver

of

growth

.

Urn

has to

be

driven

around

a

widened

and

diversified

manufacturing

and

industrial

base

,

wfuch

will

Squire

freeing

up

ofland

under

agriculture

Ai

least

there

i

this

fact

.



Resolving

land

issues

and land

reforms

largely

tall

in

domain

of

the

state

governments

,

as

a

result

,

progress

and

priority

accorded

to

this

sensitive issue

has not

been

uniform across

different

states

.

It

has

not

got

the

desired

attention

because

of

vested

*

interest

group

,

nexus

between

'

land

mafias

’

and

political

parties

.

There

is

a

need to rise

above

them

,

impart

a

decisive

thrust

and

a

resolve

,

of

implementing

land

reforms

,

in

the

national

interests

and

also

for

the

benefit

of

a

large

cross

section

of

people

,

the

land

less

and

the

poor

.

LAND

REFORMS

ANOTHER

PERSPECTIVE



Economy

and

Indian

Economy

India and

are

country

and

the

country

to

thar

of

for

accelerating

is

not

seen

as a

the second

largest

to

the BRICS

.

More recently

,

the same

sratui

cconomyj

world countries

.

,

’

and

global

has

millions

of

Commission

e

country

,

of its

population

,

a

feature

which

to

the

global

^

large

proportion

in

social

of

favourable

d

stress

on

skill

sAL

eN T

FEATURES

—

'

‘

NEW

I ND I A

’

.

„

di

,

k

bdng

now

referred

ro

*

.

Wkc

,

economy

when

:

economic

deefeion

.

of

production

and

(

iricniB

arc

largely

rhrough

market

Foicci

of

demand

and

monly

lather

than

the

government

n

Ar

present

,

pricing

of food

grains

(

minimum

support

price

,

mail

peiro

goods

such

as U

G

,

kerosene

and

diesel

(

administered

price

mechanism)

,

fertilizers

(

group

mention

price

scheme

)

and utilities are

regulated

by

government

and

pricing

of

the

remaining

products

are

marker

determined.

Prices

determined

ihrough

the

market

arc

said

to

be

efficient

1

.

Hie

afoncni

cn

lion

cd

arc some

of

t

he

emergi

ng

fea t u res

of

]

n

d ia

known as ib e

'

New

Ind

ia

’

Two

aspects

need

to be remembered

in

mind

.

First

,

the

global

perceptions

having

changed

about

India

give

*

;

i

new

perspectivfc

Secondly

,

they

reflect

the

‘

advantages

’ for

India but still

need

harness

ngt

hro

ugh

cducat ion

and

skill

form

at

ion to

bccon

verted

asop

portu

n

iries

.

o

rherwise

,

India

from

a

position

of

strength

in these

advantages

can

be taken Over

by

other

emerging

economics

However

,

then

in

our

steal

and enthusiasm

wc

should

not

forget

that

there

is

also

a

Real

India

which

one

has referred to

in

the earlier sections

,

too

which can

gloss

New India

It

may

be

useful

to

just

revisit

the

Real India

of

having

the

following

features:

*

Large

population

residing

in

d

Lakh

odd villages

in

the

country

completely

oblivious

of the

New

India

,

under

abject

absolute

poverty

,

undernourished

and

living

under

pitiable

conditions

.

*

Traditional

,

subsistence and

stagnating

agriculture

sector

*

Lack of

employment

opport

unities

in the

economy

with

large

-

scale

unemployment

*

A

large proportion

of the workforce of Over 90

per

cent

engaged

in

the

informal

sector

in

casual

work

for

livelihood

.

*

While sectoral

composition

of GDP

has

altered towards

service

sector

but economic

dependence

continues

to be on

the

agriculture

secror.

*

The

increased

growth

of recent

times as

well

as benefits

of

reforms

of

no r

having

touched them Or

an

exclusive

rather than

inclusive

growth

.

*

Completely

oblivious of

the

fact

that

there

is

an

international

perspective

of a

New

India

,

The

most

notable

aspect

of the

Real

India is

the

large

number

of

population

which

continues

to

Jive below absolute

poverty

levels

and

thar

India

continue

to

be

home

to

th e

largest

number

of

poor

people

in

the

world

While

we

can

draw

comfort

of

the New

India

w

should not

forget

the

'

Real India

'

which

is

where

the soul

of the

country

resides

.

The

biggest

challenge

for the

government

and

the

economy

is

to

integrate

ca

India

,



THE

INDIAN

ECONQ

*

Six

since

setting

up

of

public

s

=

«

or

,

an il

be

said

they

have

delivered

or

athie

^

(

he

objectives

?

(

)

Broadly

They

have

delivered

in

creating

significant

capacities

1

in

all

core

arc

*

^

havingachieved

sell

-

reliance

in

dl

kinds of

industrial

goods required

in

theccoti

^

2

)

Today

,

India

can

safety

claim

that

it

is not

dependent

on

any

country

fer

^

requirement

of industrial

goods

largely

due

to

the

public

sector

(

3

)

I

hey

have

provided

gainful

employment

,

(

4

}

It has

also

facilitated

evolution of the

private

sector and

also been

responsible

fort

ht

levels of indusiHabitation

an d

industrial

maturity

reached

{

5

)

They

can

also be credited

for

malting

the industrial sector

a driver of

growth

an d

lifting

overall

rarcs of

growth

*

They

have had

[

licit own set

of issues too

*

but

many

of

rliem

cannot

be

directly

attributed

to

them

,

issuesof

capacity

utilisation

,

technology

-

related

*

time

and cost overruns but

ttiojt

importantly

,

ui

3

ny public sector

enterprises

arc

loss

making

.

Of the two hundred

twenty

odd

PSU one

third

arc

loss

making

with

high

levels of accumulated Josses

.

However

,

can we

realty

blame the

public

sector

fo r

being

loss

making

?

Public

sector

was

set

up

with

socio

-welfare

considerations

provided

the

objectives

of industrialization

,

self

-

reliance

,

employment

generation

,

development

of backwardftribal areas

,

Mon

fundamentally

,

government

ownership

and

profits

do

not

go

together

Profit is a

function

of

pure

businesses

and

public

sector

by

virtue

of

government

being

the owner

cannot

function

as a

pure

business

*

Similarly

,

to

comment

on th e

efficiency

levels of public

sector

is incorrect as

efficiency

levels

can

be

envisioned

amongst

the

'

comparables

One

can

comment

on

who

is

more

efficient

amongst

sa y

,

Pepsi

and

Coke

However

,

all

public sectors arc

operating

as

monopolies

in

terms of their scale of

operations.

Whom

would

you

compare

ONGC or

BHEL

or SAIL

with

?

This is true fo r all

public

sectors

It is

nor to

say

that

public

sector

is efficient

The

expression

conveyed

here

is that

it is nor

possible

to comment on

efficiency

levels of

public

sector based on

efficiency

levels

of the

private

sector

Further

comparison

of the

public

sector is

technically

incorrect as

private

sector

operates

as

a commercial

venture with an

explicit profit

motive unlike

the

public

sector

which also

have

social

objectives

to fulfil

Public sector has

not

to

be

envisioned

from

dir

perspective

of

pro

fit

-

making

or

efficiency

levels

but

in the larger

context

of

the

objective

?

which

arc

assigned

to

them when

they

were

set

up

We

won

Id revisit

public

sector a

bk

later after

developing

an

undcrstandingoftheindustml

policies

which have

defined the role of

public

sector an d also

path

of industrialization

.

INDUSTRIAL

POLICIES

Jhe

role of

public

and

private

sector

,

overall

direction to industrial

growth

and

the

int

^

rrialization has

been

guided

by

various

industrial

policies

of the

government

that

ha

?

her

announced

from dmc

-

to

-

rime in

view of

changing

priorities

starting

from 1948

on

*

?

INDUSTRIAL

SIC

However

,

c

1

«

rl

;

1956

which

has

gl

Policy

of 199

wh

:

|

>

e

required

IQ

go

1

suffice

to

see

i

lie sal

understanding

eft

contest

,

Industrial

Folic

{

I

)

The

industrii

licensing

syit

activity

, hesid

(

2

)

The

policy

oi

as

eighteen

at

allowed

but

sector

could

:

f

3

)

Thus

,

most

t

etc

,

,

were o

«

(

4

)

Bigger

priva

restrictive

rra

foreign

com

|

(

FERA

)

and

(

5

)

It was belies

to

monopoli

commencing

for

capacity

i

(

6

)

The earlier

|

control over

over

from

pi

industries wi

nationalized

(

7

)

ibc

pre

-

199

cement and

tS

)

Each

and

cv

,

which is

oo

-

tilted

toward

To

summarize,

th

dominance of th e

private

sector

con

EQ

NEW

EC

As

mentioned

ptr

idia

Though

id



m

THI

INDIAN

ECOHO

^

but

nOT

seed

«

reforms

made

:

N D J

»

f

»

l A l

*

1

A

time

li

*

i

-

;

DoVlcV

3

t

greater

freedom

for

doing

businesses

outride

the

gov

*

,

,

^

y f

,

. .

>

r

and

larger

rule

for

^

„ explicit

in

the

polity

of J99

I

.

ft

is

also

kmnvn

a

*

dif

^

Industrial

Policy

or

the

New

Economic

Policy

,

and

also

known

*

the

polity

of

libera

^

*

n

1

end

oflicencc

/

pemiit

rajoreven

end

of

bureaucratic

control

over

functioning

of

the

th

—

«

-

*

»

.

h

-

u«

-

ouuut

*

.

Ji

[

i

also

imtiugn

dear

distinction

b

companies

,

This

lifted

all

bureaucratic

control

on

their

functioning

.

Price

regulate

[

ncrcmenul

in

veil

paved

a

way

to

the

market

determined

prices

for

most

of

the

industrial

goods

Hie

C

0

nCcnlUit

’

tm

ad

emphasized

on greater

competition

and

level

playing

field

for all

players

.

J

(

.

(

lfI

l

(

J

Ft

advocared

liberal

foreign

investment

policies

to

attract

foreign

investment

in

^

undcrmlnf

country

(

more

about

this

in

upcoming

sections

)

.

Broadly

,

the

New

Economic

Policy

or

frjVilte sector

in

<

1

die

Industrial

Policy 1991

has three broad

areas

which arc

as

follows

:

Public

Sectors

JJAhr

^

control

,

reduced

the

role

for

public

sector

,

dc

-

rcscrving

areas

and

larger

role

fo

,

,L

private

sector

,

doing

away

with MRTP

/

FERA

act

and

dispensing

with

MRTP

a

(

ltj

j

TTiit Jibed all

bureaucratic

control

on

their

functioning

,

Price

regnlj

,

.

{

]

}

Liberalisation

.

(

2

)

Public sector

.

(

3

)

Foreign

investment

.

Liberalization

It

is

widely

perceis

I opening

the areas

1

not

from

a

negativ

I

which

were reserv

Ihe

policy

of

Liberalization

as

a

policy

basically

dispensed with

the

earlier

licensing

and

the

registration

subsequently

in

k

system

providing

the

freedom to

private

sector to set

up

industries without either

(

hi

except

for

atomic

need for

a licence or

a need

for

registration

De

-

licensing

was

the most

important

aspeflj

sector would

be

sc

of

the policy

of liberalization.

Two

areas

,

atomic

energy

and

railways

would

not be

open

.

internal

accruals

<

for

private

sector

participation

.

Even while

doing away

with

the

licensing system

certain

would

be

made

critical

areas

still

require

a

licence but

opened

up for private

sector

participation which

'

companies

,

are

as

follows

:

S

there

was

a i

Appointments

cot

(

1

)

Any

kind

of

fire

arms and

ammunition

,

explosives

.

3

Chief

Executives a

2

Drugs

and

pharmaceuticals.

1

public

sectors

wei

(

3

)

Coal

mining

.

X

through

the

toncc

4

Defence

equipments

3

performance

and

(

5

)

All

kinds

of

wines

,

cigarettes

and

spirits

Mininavrattan

,

of

6

Hazardous

chemicals

,

jl

1

he

policy

has

i

there

would

be

nony

environment

degrading

and

polluting

industries

would

not

require a

licence

but

m

exceptional

dram

administrative

clearance from

the

respective

ministries

of

ccntral

/

statc

government

before

^

comwr

investment

Further

,

as

a

part

of

liberalization

there

was

now

no

restrictions

on captf

'

tf

of

public

sector

T

1

expansion

and

diversification

by

the

private

companies

.

The

policy

thus allowed

the

private

investment

which

sector to

operate

as

pure

businesses

with

minimal

bureaucratic

control and

be

driven

expand

operations

largely

by

demands

in

the

markets and

opportunities

available

.

Ojsjhi

/

Why was

this

done

?

ft

is

important

to

understand

that

even before reforms

,

despite

d

*

regulations

,

the

private

sector

struggled

,

operated

within

the

constraints

of

the

go

vertimc

^

Both

disinvestmen

but

survived

and

was

not

completely

eclipsed

by

the

public

sector

.

I

lie

changing

cc

0

”

t

,

[

^

llublic

sector

,

the

scenario

required

a

different

orientation

focused on

efficiency

,

productivity

ant



HDUSmiAL

SECTOR

AN

£

1

113

=

»

AL

IATIQN

^

5

«

f

*

E

^

,

:

a

^

£

*

»

*

«

:

^

4

t

rafimiaJ

L

i

^

'

l

-

TUne

*

»

3

*

ffl

;

3

Stil

H3

3

I

?

?

it

S

3

«

aw

«

*

7

^

303

»

«

^

'

»

=

»

*

*

-

»

*

*

ri

*

*

ju

^

tr

wd

&

rc

of

people

ts

affected

like

railways

of m

the

laiioful

in

tersH

1

ike

atomic

?

5

‘

f

©

fc

-

^

*

»

*

.

““

«

<

*

i

.

government

of

the

%

of d

*

privnt

raor

^

(

±

ci

^

requirements

beitet

than

th e

government

*

-

1

3

*

”

ic

has

te

r

responsibilities

of

pnJvUiiDg

good

and

efficient

enabled

environment

,

addressing

the

welfare of

th e

mawa

.

wS

-

tifdj

ire

r

more

important

than

running

public

sector.

Especially

,

when

today

ricre

ts maturity and

competence

in

the

private

sector.

*

P

*

»

&

treking

public

sector

Privatization

is

not

about

profit

malting

cue

mtf

*

larger

reason of

whether

it

will

continue

to remain

profitable

in

future

with

incense

ind

fierce

competition

.

57

*

pftvariaamo

is

not

for

today

but for

a

brighter

future of

the

public

weror

in a

pr i

-

j

^

imsi environment

equipped

better to

meet

rhe

challenges

.

I

Any

;

CS

:MSS

requires

the

ability

to rake

prompt

business

decisions

,

ir

is

not

about

whether the

decision

was

right

or

wrong

.

Such decisions

will

always

have business

rctfcj

bur

whar

is

required

is the

ability

to take the decision

quickly

fhc

structure

pf

puhLc

rector

globally

is

such

that ir

suffers from

delays

in

decision

-

making

.

>

?

T

7

;

id

2

anon

is also about

handing

public

sector

no

a

‘

visionary

'

who

understands

tv

-

rincis

.

LmdfflRpds

priorities and

knows how ro make the

public

sector

grow

to

greater

heights

and

help

it

to

emerge

as

a

global

company

.

t

^

ruuig

tie

above

facts in

view

the

government

went for some big tidtci

privatization

like

due OC 3

ALCO

i

Vedanta

Group

)

,

VSNL

(

Taus

)

,

IPCL

Reliance Industries

),

Modem

Foods

Unilever

}

,

and

Maruti f

Suzuki

}

. Even Round

1

of

privatization

was

performed

tends

;

lot of

controversy

ranging

from

the

need

to

issues

of

valuation

Whv Lie

opposition

to

privatization

)

The

reasons

are

detailed

as follows

;

1

,

ft

wjs

tkared

that

government

owned

monopolies

would

be

replaced

by

private

sector

rr

onopdw

and

could result

in

exploitation

by

the

private

sector

The

government

has

scarified chat no

public

sector

operating

as

a

monopoly

would be

privatized

-

Only

those

whih are

operating

in a competitive

environment

would be

privatized

.

Until

they

arc

able to

operate

in

a

competitive

environment

there

would only

be

disinvestment

of

such

public

sector

2

,

f

;

a

also

feared

that

privatization

would

result

in a

large

number of

workers

kid

off

or

would lose

their

;

obs

thereby

adding

to

the

pool

of

unemployment

,

it

needs

ro

be

understood

that

public

sector

being

speeded

in

nature

,

he

workers

by

virtue

of

experience

have

acquired

a

dull

set

which

no

owner

would

like to

lose. Rather

than

retrench

.

her

would

be

redeployed

,

f

31

1

,

L

,

abo

widely

MW

*

*

P

‘

«

“

<

k

''

“

ived

fo

>

.

“

tflTTf

M

d

*

Mgfi

,

j

5

fici

‘

“

d

n

°

'

^

maaes or

used

to

create

social assets

in

the

economy

^

The

govern

men

i

has

already

set

up

the

National

Investment

Fund

(

N

1F

)

for

aarg

^

taa

investment

in

profitable

avenues

,

would

be

used

7

>

pet on

c

)



ygj

E

INDIAN

ECONOMV

asKtsind

the

fairing

25

per

cem

fo

ro

iv

.

l

of loss

making

public

sector

^

snd

meeting

the

expansion

needs

of

the

profitable public

rector

units ,

fc

)

Ihc

corpus

of

the

NIK

would

be

minted

by UTI

mutual

fond

,

SB

and

Lie,

4

)

Given

the

high

level

of fiscal

deficit

it

would

be

difficult for

the

government

to

d

„

irt

from

reducing

the

deficit

through

proceeds

of

disinvestment

and

privatization

.

Despite

th emerit

and

the

need for

privatization

the

government

right

folly

is not

eonsidni

^

ny further

privatization

and

would

rather watt

fo r

consensus

building

amongst

politic

)

parties

,

trade

unions before

privatization

as

it

is

a

long

protracted

process

spanning

seven

decades

.

Both liberalization

as

well

as privatize

lion are

the major

planks

of

the

economy

reforms

,

Ihe

government

by

pressing

the

‘

pause

button

oil

privatization

is

being

criticized

as

slowing

down of

reforms

or of

having

gone

‘

soft

’

.

Privatization should

not

be seen

as the

only

aspect

of

reforms.

Neither

should one

ocpeci

an

end

of all

economic

problems through

privatization

. A

similar

misplaced

belief

was

tlletc

when

public

sector was

se t

up

. Privatization at its

best

provide

only

for

an

efficient

and

competitive

domestic industrial base

and cannot

be

saidas the

‘

only

aspect

of

reforms

.

That

are so

many

oi

her softer

reforms

(

relatively

easy to

implement

through

an

executive order

of

the

government

) ,

which could have been

done

.

Despite

the

policy

of liberalization there

ate

still bureaucratic

hurdles

.

In terms

of

World

Bank survey

,

on the relative case

ofdoing

business

outside

government

approval

,

regulatory

clearances

,

India

’

s rank

is

a low

of

one

hundred

and

thirty

-

four

out

of one

hundred

and

cighty

-

threc countries.

Singapore

is

tanked

as

number

one among al l

other countries.

Similarly

,

‘

Licence

Raj

has

paved

way

to

‘

Inspector

Raj

.

Today

,

as

many

as

thirty

different inspectors

visit

the

factory

premises

under

various Acts

as

against

2

-

3

in

China

,

Getting

an

electricity

connection or a

no

objection

certificate

from

pollution

control

board is

still

difficult

,

Collection of

excise

duty

is

cumbersome.

There is still

a

lot

of

bureaucratic interface

for

performing

business

in

India

and

that

is

where the

government

needs

focusing

.

Thus

,

liberalization has

helped

but not

to that

levd

by

global

standards

.

It

is

rightly

said

that

what India

needs

is

‘

thousands of smaller

reforms

and

'

big bang

reforms

’

can wait till

acceptable

or

till

a need

for

them

is felt

.

Q

ROLE

OF

PUBLIC SECTOR IN

FUTURE

The

NEP

1991

has

given

rise

to certain

wrong

perceptions

about the

public

sector

,

mentioned

earlier

,

‘

clipping

of their

wings

’

,

or

'

diluting

the

status

of

public

sector

.

r

needs

to

be

clarified

first that

it

is

not

th e

clipping

of

wings

but

only a

larger

role

for

private

sector.

Neither

is th e

status being

diluted

given

the

huge

investments and asset

base

of

d

*

public

sector in

the

country

.

The

policy

should

not

be scon as

undermining

the

impound

of

public

sector

,

but

role

of

public

sector

would

undergo

a

change

as

mentioned

below

(

I

)

From

a

welfare

orientation

they

would

shift

to

function

as a

commercial

vennt

*

Pr

<

?

^

IS

^

an

objective

to

the

extent

feasible

as a

public

sector

,

U

}

hr

°

m

P

^

^

on

-

orienxed

they

would

become

productivity

-

orientd

.

iNDUSTRIAt

SEC

(

3

)

They

will

opt

operate

with

j

(

a

)

Many

r

Navratn

taking

ii

requiem

(

4

)

Ihcre

would

as

oil

compa

scale

and

hel

(

5

)

Many

publi

sector

to

be t

(

6

)

There

is

a

li

and

greater

(

7

)

The

chief

c

based

on

m

(8

)

There

woul

comperitioi

(

9

)

Gradually

,

companies

operate

alu

(

10

)

Efforts

wo

avenues

fc

so

that

thr

making

pi

privatizatii

(

11

)

However

,

ability

to

I

HI

EMER l

The

most notab

and

the

ability

c

It

can be

said

i

Industrial

Polic

Already

,

sint

companies

,

exp

They

have

beer

recent

times

.

H

U

)

A

larger

t

diversific

(

2

)

They

will

public

sc

eroding

t



nil

,

|

|

t

;

»

«

«

I

*

4

U

|

bn

(

l

|

(

Hi

M

*

tvari

|

<

uH

|

|

t

>

wm

lit

.

u

.

tcm

hind

itu llicir

milr

i

u

|

their

alt

foul

< >

LU

aim

mg

all

fU

dimy

<

hum.

^

nun

ill

iMPUf

-

MlAt

fttCHQR AMO

MHtMAM

/

ATION

tf

)

Iky

will

Mill

«

wr

pmlrwfonalUm

and

well

rim

public

would

*

,

|

in

.

ii

.

wlili

opeudunul

'

inti

functional

autonomy

to

the

extern

feasible

,

Id

Mdliy

mint

-

|

>

nhlb

»

«

<

n i

would

acquire

the

xm

f

'

Mlnl

-

iuvranari

,

^

MJIUIHIMUV

,

ridding

ilicm

a

greater

degree

of

freedom for

u t \

m

inmmieiii decision

*

by

(

he

respective

boards of

public

rector

an d

not

n

i

|

iiiimy

wiwnnwiH

approval.

H

)

III

.

O

would

Iw

an d

likelihood of

mergers

amongst

public

sector

such

m

oil

C

.IIIH

|

IIIIH+

'

SH

iiarioi

milled

bank to

enable

them

to

achieve

greater

economies

of

v

-

ilt ami

help

<

InMI it

.

compete

whh

glolud

companies.

(

1

}

Many

publh

HLINTS

may

opt

lor

oversea

*

acquisitions

paving

the

way

fo i

public

sc

.

i

<

II

to become

glnh

.

il

players

,

[

rd

llt

<

t

‘

i

'

J

lil

. f

Uliiioil

ol

ptiMiL

set tor

getting

inm

jnim

ventures

with

private sector

Lm

.

ljjuLtiL

i

Joint

participation

In

key

areas

{

/

)

lb

.

CIIIL

'

I I

'

SL

-

Lillve

nllit

t

‘

1 ul

public

secroi

would

be

considered for

appointment

bawd

im

i

net

It

and

.

nmpcwncc

both

wiihin

as

well

as

outside

the

govern

mem

.

(

HI

I In

i

L

would

hr a

level

playing

field with the

private

sector allowing

for

healthy

compel

binii

.

pH

L

. r .

LiIndly

.

tlieli

monopoly

>1

,

0us would

gei

diluted

sviih

entry

of

private

and

foreign

companies

and

they

would not he ai

commanding

heights

of the

economy

but

npmre

along

whh

private

ami

hireign companies

(

10

)

If

flmis

would be made to

address the loss

making

public

sector

by exploring

all

avchires

toi

i

ben

revival

through

capital

infusion

,

giving off

accumulated

losses

so

dial

they

can

start alirsh on

a

clean

slate

,

However

,

all

such

iwivab

of

the loss

making

public

sector

may

come

wiih

a

Vidor

1

,

that

this revival would

he

subject

to

pdvadration

subsetpiemly

(

I II I

towevci.

ihe

biggest

challenge

before the

profitable

public

sector

would

b e th eir

ability

to be

LOI

11

pi

’

tilive

,

productive

ami

efficient

an d

remain

profitable

in future.

iliai

U

i

hm

level

rcloniu

'

*

CH

>

h

prlw

<

<

“

I

tht

1

*

5

vtnW

*

FT

EMERGING

ROLE OF

PRIVATE

SECTOR

lire

tunable

failure

nl

ihe

Industrial

Policy

of

(§

91

is

the

acceptance

of the

maturity

and

die

ability

ol

the

private

se c

n

>i

and

their

capabilities

to

shoulder higher

responsibilities

U

tan

be

said

that

ibe

emerging

u

>

lc

of

(

he

private

sector

has

been

crystal

tied

by

the

Industrial

l

\

iUcy

M

‘

)

l

,

Already

,

sjmc

die

List two

denies

n

domes

here

have

ken an Increased

number

of

“

'

mpjhks

,

expansion ami

divcndlicatfon

by

existing

companies

.

entering

imo

ke y

areas

M

have been

responsible

lor raising

industrial

gmwrii

and

aim

lifting

India

'

s

growth

in

,

Pl

«

U

times

,

I

hr

imoLc

will

thus

witness

the

following

:

ID

i i

lugL

I

LCspondbilitv

on

ih c

shuilldcrsnUhe

private

sector

fo r

tire reusing

investment

.

ulsi

.

ii

;

imlmtii

„

V

„

ill

i

L

U

.

K

/

LTiLtal

—

«

«

*

kk

«

«

Cfrtj

*



(

HDUSTRIAL

SECTOR

AND

L I B E R A L I Z A T I O N

h

«

=

SSi

fc

COlUl

P

^

tr

*

^

;

°

*

W

.

ovtr

^

the

board

;

for

all

Ifa

director

moral

an:

,

reftm

:

f

biisiiws

-

over

in

tk

procutt

riaic

^

®

1

*

s

been

*

*

called

^

o

sf

*

1

tb

»

iR

^

*

co

^

o

»

^

thc

m

f

,

d

a

-

rr

WOukl

*

l

,

Jrfhcf

in

f

«

,

u

,

.

*

*

^

tTW

n

1

a

,,

d

priVi

,

t

:

*

*

*

*

*

ho

«

U

«

co

*

i

all

foe

key

areas

and

jointly

merging

industrial

and

overall

Krow

h

bf

hr

«

*

ro

my

The

mixed

economy

character

has

always

been

an

avowed

objective

of the

liP

Sin

«

the

first Industrial

Policy

of

1948

,

however

,

it

was

only

seen

.

s

JJ

}

inwitn

of

hr

government

,

more

on

paper

,

The

foturc

is

likely

to

see

foe

true

emergence

of

the

„„

,

H

economy

character

lire

policy

of

libera

lotion

has

imposed

g

/

ca i

confident

*

„

n

he

private

sector

,

os

becoming

partners

m

the

government

in

developmental

dfom

,

operating

wifo

a

code of

ethics

,

business

and

moral

responsibilities

,

transparency

in

operatfom.

It

is

UP

lo

thc

Pf

'

vart

sector to

rise

m

the

occasion

,

meet

he

expectations oJ

che

government

and the

people

and

ensure

that the

confidence

reposed

is

never

|

c

down

,

However

,

for the

private

sector

to

truly

emerge

as

visualized

in

the

policy

would

require

ihc

government

change

from a

direct

provider

of

goods

and

services

in

creating

that enabling

environment

,

to

permit

rather

than

prevent

,

to allow

rather

ihan

stop

,

The

challenge

before

the

private

sector

is

not

only

to

deliver

,

but

in

a

more

responsible

manner

realizing

rhat

business and moral

responsibilities

go

together

.

Exit

Policy

‘

It

is

often

said

that absence

of

an exit

policy

is a

cog in

he

wheels af

liberalization

,

'

What

is

an exit

policy

?

The

policy

of liberalization has

given

the freedom

of

entry

bui

aho

given

the

risks of businesses that

it is

not

necessary

for

al l

to

survive

,

some

may

die a

natural

death

,

some

industries may need

to

reorient

into different

businesses

by

closing

down

existing

businesses

and

there

l ies the

need

for

an

exit

policy

.

An

exit

policy

thus facilitates

companies

to

close

down

heir businesses

,

allowing

them

to reorient

*

restructure operations

,

in

terms

of market needs

,

with

minimum

restrictions

from

the

government

and

in

a

quick

time

frame

*

At

presenr

,

in

India there

is

no

exit

policy

and

closure

of

companies

is

complex

and cumbersome

with

multiple

government

bodies

and acts

’

making

closure

exrremcly

difficult

and

can

take over

several years

.

Realizing

its

importance

the

government

has set

up

the

National

Company

Law

Tribunal

’

as

a

one

stop

shop

,

single

reference

poinr

for

all

sick

companies

either

seeking

revival

or closure within a

period

of

twenty

-

four

months of

the case filed

with

NCU

,

Ih

s

would

bring

under

one

roof

all

the

multiple

bodies

together

to

work

in

a

coordinated

manner

cither for revival

or for

the

closure

of

companies

in

a time

bound

manner

.

I

he

NCLT

is

yet

to become

operational

as

ir

requires

amendments

to

various

act

and also

compliance

of

legal

formalities

.

An

cxi

.

policy

also

has a

ticklish

issue

which

is

labour

-

relaicd

and is

a

larger

freed

,,,

n

to

ihc

management

of

companies

in

addressing

lahour

rclaied

issue

.

Ihat

..

.

d

there

is

freedom

ro recruit

.

here

should

also

be

discretion

.

0

a

company

to

dismiss

an

the

larger

nucresrs

of the

company

Unfortunately

,

all

the

labour

la

»

s

ha

.e

been

enacted

during

1920s and 1930

s

to

protect

the

interns

*

of the

worker

,

n

rhe

'

dusmal

rerun

and

making

dismissing

labour

as

virrually

impossible

with

fears

of

.

.

nice

,

and

labour

unrest.

_

I



I

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a

fe

u

n

io

m

e

m

p

h

a

si

s

in

g

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p

o

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t

h

e

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e

d

f

o

r

s

u

c

h

r

e

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s

a

n

d

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r

ri

vi

n

g

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a

b

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a

d

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s

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d

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W

ha

t

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s

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p

a

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i

ng

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t

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g

ov

e

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m

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n

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e

s

k

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re

f

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I

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i

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th

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s

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nd

h

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e

p

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e

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ia

l

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e

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h

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ng

a

t

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e

at

u

p

h

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av

a

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a

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c

a

n

h

a

v

e

a

g

ra

v

e p

o

l

iti

c

al

fa

l

lo

u

ts

an

d

h

a

s

t

o

tr

ea

d

c

ar

e

fu

ll

y

a

n

d

g

ra

d

u

a

l

ly

b

y

b

ui

ld

i

n

g

c

o

ns

e

n

su

s

s

te

p

b

y

-

ste

p

U

n

til

s

u

c

h

a

t

im

e

it

m

ay

d

el

a

y

f

u

rt

h

e

r

re

f

or

m

s

a

n

d

t

h

e

co

rr

ec

t

w

a

y fo

r

go

i

ng ah

e

a

d is

t

o m

a

k

e a

m

o

de

s

t

a

n

d

a

cc

e

p

ta

bl

e

b

e

gi

nn

i

ng

. A

t

th

e

s

a

m

e

ti

m

e

it

s

h

o

u

ld

al

s

o

b

e

ke

p

t

i

n

m

in

d

t

h

at

w

it

h

ou

t

c

h

a

n

gi

n

g

th

e

l

ab

o

r

e

n

vi

ro

n

m

e

nt

a

n

d

w

i

th

pr

es

e

nt

l

e

v

el

s

o

f

pr

o

te

c

tio

n

t

h

ro

u

g

h

m

u

lt

ip

le

t

ra

d

e

un

i

on

s

would

only

imply

not

getting

full

benefits

of

reforms

for which reforms

cannot

be blamed

.



g

,

electr i

city

d

ports

and

of

ir

rigatio

n

in

frastru

cture

urban

ar

eas

)

ti

on

and sk

ill

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ter

ms

of

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ed

for

mo

re

the g

rowth

of

m

mun ica

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*

characteristics

uctur

c

It

can

need

to

be

re

e

lectrici

ty

is

mainte

nance

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n

d

not

for

the

ould

beco

me

fr

om

the

pa

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in

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ve

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ed

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f jF

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ENT

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Hctice

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in

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ing

the

t

ime

a

,

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his

,

inL

.

o

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So

what

effects

infrastructure

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„

w

h

£

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uildin

-

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sim

ultaneo

usly

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the

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ss

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rT

I S S

U E S

IN

I N D

I N

I N

F R

S T

R U C

TU

R E

1

Need

for

Long

-

term

R

esourc

es

—

it has

bee

n

estim

ated

by

the

Plan

ning

Com

missio

n

0

f I

ndia

th

at

an

inv

estment

of

US

1000

bil

lion

is

require

d

in

overa

ll

infras

tructu

re

alo

ne

over

the

ne

xt J

0

year

s

.

this

wil

l

b

e

USS

500

bi

llion

in t

he

next

five

years

or an

an

nual

inv

estmen

t

of U

5

S

100

billion

for

sustaining

the

present

:

levels of

growth

and

if

we

are

talking

about

highe r

levels

of

gr

owth

the

m

agnitu

de

of

invest

ment

w

ill

only incr

ease

furt

her

.

Thi

s

would

m

ean

that

investm

ent in

i

nfrastr

ucture

wh

ich

is

pr

esently

a

round

5

5

pe r

cent

of

GDP

would

h

ave

to b

e

more than

doub

le

to

12

.5

per

cen

t.

Infras

tructur

e

pro

jects

hav

e

lon

g

gestat

ion

pe

riod

ra

ising

su

ch

long

-

te

rm

reso

urces

on

an ong

oing

ba

sis

is a ma

jor

issue

.

Such

lon

g

term fun

ds

ar

e usua

lly

a

vailabl

e

in

insura

nce

and

pen

sion

fun

ds b

oth

of

whic

h

are

re

lativel

y

still

evolvi

ng

in

Ind

ia.

Insuran

ce

p

enetra

tion

is

very

low

and so are pen

sion funds

.

Banks

arc not

able to

ta

ke

expo

sures

giv

en

the

nee

d

for lon

g

te

rm

reso

urces

a

s

it

will resu

lt

in

mi

smatch

betwe

en

asset

s

an

d

liabi

lities

an

d

ca

n we

aken

the ba

nks

.

2

)

Prici

ng of

Infrastructure

—

another

issue

is

the

under

pricing

pricing

less

than

the

co

mmerc

ial

viab

ility

in term

s

of

the ma

rket

o

f

in

frastru

cture

which has

qu

estion

ed

i

ts

sustain

ability

in the

long

run

.

J

Abse

nce

of

V

isioning

-

a

s

m

ention

ed

pre

viousl

y

,

a

key

feature

o

f

infrastr

ucture

is

the

need

for

v

isionin

g

say

Infra

struct

ure

in

India 205

0

.

N

o

seriou

s

though

t

*

being

give

n

to

th

e

req

uireme

nt

of

infrast

ructur

e

o

ver

the

next 30

4

0

years

4

I

nfrastr

ucture a

s

a Natio

nal

Issue

infra

structur

e

deve

lopme

nt

con

tinues

to

be

d

riven

thro

ugh

v

arious

gove

rnments

in

term

s

of

their

own

prioriti

es

.

One

g

overnm

ent

may

fo

vour

bu

ilding

hig

hways

where

as

anothe

r

govern

ment

nt

ay

fed

making

r

ural ro

ads

a

pri

ority

.

Infra

structu

re

has

to

b

e

mad

e

apoit

cu

tting

across

pa

rty

l

ines

as

a

nat

ional

issu

e

.

s

R E

C E N

T

M

E S

UR

ES

T

K N

B Y

TH

G

OV

R

NM

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T

1

he

gov

ernmen

t

real

iz ing

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rtance

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nfras

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ral

secto

r

has

ta

ken

a

num

ber

oi

^

that

are

brie

fed

b

elow

[

l

set

up

the

In

dia

Infr

astruct

ure

Financ

e

^

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j

o

evera

ge

an

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verag

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investm

ent

in

in

frastru

cture

proj

ects

‘

C

Mmcu

o

f

ove

r

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)

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:

n

India

.

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5

)

The

government

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recently

announced

the

public private

sector

partnersh

.

p

(

PPP

|

model

for

i

n

frast

ruemre

projects

in I

ndia

*

(

a

) This

model

seeks

to

leverage

on

the

strengths

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the

government

(

mter

-mimstt

*

clearances

,

environment

and

forest

clearances

,

shifting

of

vital

installations

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land

acquisitions

)

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b

The

private

sector

is then entrusted

the

task

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building

the infrastructure

in

terms

of

government

specifications

by

using

their

own

resources

in

a

give

*

time

period

*

There

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an

incentive

mechanism

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projects

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c

)

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private

sector to

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pie

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Competence

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the

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projects

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also done

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the

private

sector

rathe

than

by

the

government

,

(

c

)

Recently

,

the

government

under

the

PPP

model

has

also

initiated

levying of

negative

grants

'

for

highly

profitable

road

projects

.

(

f

The

private

companies

while

bidding

for

such

projects

would also have

to

provide the

amount

of

money

from

their

likely

future

earnings

they

are

willing

to

give

Up

-

front

before

the

contract is

awarded

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the

government

,

as what

ii

known

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negative

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.

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vere

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,

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the

jawaharld

Neh

National

IS

Urban

Renewal

Mission

(

JNNURM

(

6

)

That

is

,

to

say

the

government

cannot

absolve

itself

of

its

responsibilities

of

I

infrastructuredevelopment

{

LntCt

-

inscaji

Tlie

twin

challenges

arc

as

follows:

How

would

tlic

government

raise

resources

given

the

budgetary

constraints? The

infr

^

J

compulsions

of the

Fiscal

Responsibility

and

Budget

Management

Act

(

FRBMA

)

would

lrUcil

3

fT

nor

only

allow

it

to

raise

expenditure

to

keep

the

deficit level

under

cheek

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government

l

r

I

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bas

a

legacy

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spender

in

the

economy with

as

many

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le

|

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I

government

projects

delayed

by

over

eight years

with a cost overrun of

f

49.000 crorcs

,

H

I

How

to

make the

government

an

efficient

spender

in

the

economy

? There are

myriads

road

proje

.

I issues

of

land

acquisition

,

inter

-

m inis

re

rial

coordination

and bureaucratic

delays

which

is

BOD

modi

I

inbuilt

in

any

government

functioning

,

Tire other

is

that

wc

have to learn from the Chinese

experience

in

infrastructure de

-

)

where

-

velopmeru

They

have

kept

the scale of

existing

ideas

,

instructive and unconventional

,

sector

|

something

as

ujibelievable

Globally

,

it was believed that trains

running

over 450

km

per

hour

was

technically

and

.

,

r

.

scientifically

not

possible

.

Die Chinese have

proved

every one

wrong

They

have constructed

I

Ground 17 bridges

over

one

river

which

is

100

years

maintenance

free

and

many

of

rhem

are

_

rhe

longest

in the

world

and

oomplcred

in

record time

,

also

hjvt

:

Qoij

;

ng

,

rhoir

capital

,

has

an

airport

which

is

bigger

than

Heathrow

of

London

and

they

are

«i

*

s

^

^

ent to mcct the

passenger

and

cargo

load for the next

25

years

Their

rail link

of

,

a

*

I

2000 from

majnland

China

to

Tibet

at

a

height

of over 15

,

000

ft

is

an

engineering

f

fear

in

itself

,

India

is

still

bogged

down

with

playing

around

with

existing

ideas

,

existing

knowledge

and

technology

. India

requires

innovative

infrastructure

,

the

impossible

infrastructure

,

J

beyond

conventional

and then

just

do

it

the

way

China

has

done and

thus

requires

,

1

.

-

0

S

infrastructure

visioning

,

making

it

a

-

political

,

cutting

across

political

panics

with

die

devd

p

ohjtct

vc of

providing

the

infrastructure

to

support

higher

rates

of

growth

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at the

same

|

|

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world class

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defining

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boundaries

of

infrastructure

3 9 1

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1

62

-

ar

<

B

jjj

ENVIRONMENTAL

ISSUES

AND

INFRASTRUCTURE

A

still

larger

issue now

emerging

is the

Orissa

and

other

issue

MOW

r

J

in

Orissa

and

omer

H

around

the

infrastructure

projects

.

The

slJbii

<

also

the

nation

in terms

LiiWs

(

l

‘

projects

which

can

not

only

alter

the

face

rd

LVmit

>

ril

'

L

development

need

deeper

imrospcccion

I



THE

IND

IAN

E

CO

NO

M

,

iT

BU

C

tU

i

,

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s

he

p

ore

nt

iaJ

0

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an

de

^

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-

*

*

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bc

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w

*

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«

*

r

je

ts

How

ev

er

,

d

ew

lop

nie

nt

sho

uld

be

a

pri

me

co

nc

ern

d

earl

y

«

it

inv

olv

es ihc

p

eop

le

,

„

M

„

S

of

l

ive

liho

od

fo

r

th

em

as

fun

da

nic

ma

ll

)

m

or

e

im

|

ur

an

loda

y

1

,

nee

ds

to

b

e

rem

em

be

red

in m

in

d

rba

c

i

mp

rov

eme

nts

m

w

el fa

re

of

p

eop

le

S

tates

s

hou

ld

be

th

e

pri

me

co

ns

ide

rati

on

an

d

’

w

ay

out

’

sho

uld

be

f

oun

d

for

ad

dr

ess

in

g

th

e

env

iro

nm

ent

al

iss

ues

an

d

th

e

w

ay

out

sh

ou

ld

no

t be

by

abn

uio

n

ng

the

pr

ojec

t

bu

find

ing

b

e

w

ays

a

rou

nd

the

m

A

re

the

se

the

o

nly

en

viro

nm

en

tal

is

sue

s

?

Wh

at

ab

out

t

he

iss

ues

of sl

um de

velo

pm

ent

,

w

aste

man

age

men

t

b

ann

ing

u

se

of

pla

sti

cs

,

r

ura

l

/uth

an

h

ab

itat

ion

,

po

llu

ted

riv

en,

erosion

of

forest

cover

?

Are these

not

major

issues

?

Ind

ia

lia

s

my

ria

ds

of is

sue

s

of

une

mp

loy

men

t

,

acute

b

ack

wa

rdn

ess

o

f srate

s

,

d

eve

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me

nt

de

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t

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inve

stm

ent

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t

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elo

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ent

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vid

e

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s

ma

ny

sta

tes

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nd

su

ch

ot

her

d

ivid

es

.

If

it

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p

os

sibl

e

f

or

t

he

priv

ate

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fo

reig

n

pla

yer

s to

pro

vid

e

ans

wer

s

fo

r su

ch

div

ides

,

ih

rii

pro

jec

ts

sh

ou

ld b

e

en

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rag

ed

ra

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an

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isc

ou

rag

ed

nd

a

w

ay

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fou

nd

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the

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.

Ib

is

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g

over

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nt

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rela

ted

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ue

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g

sh

ort

si

ght

ed

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the

gu

ise

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env

iron

me

nta

l

iss

ues

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er

-

l

ook

ing

po

sitiv

e

and t

ang

ibl

e

w

elfa

re

g

ain

s

fo r

th

e

stat

es

a

nd

th

e

cou

ntry

i

s

a wh

ole ndi

,

rh

us

ha

s

a

num

be

r

of in

fras

truc

tura

l

re

late

d

i

ssu

es

w

hic

h

w

ill

sol

ely

get

co

mp

oun

ded

wi

th

inc

rea

sed

in

ten

sity as th

e

g

row

th

lev

els

b

egi

n to

acc

eler

ate

an

d

als

o

wi

th

the growing

population

exerting

greater

pressure

on

the infrastructure

Th

e

g

over

nme

nt

ca

n

als

o

co

nsid

er

of

hav

ing

a

se

para

te

b

udg

et fo

r

in f

ras

tru

ctu

re

.

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e

r

ai lw

ay

bu

dg

et

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ld

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stit

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pa

rt

o

f this

b

udg

et

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in

g

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r

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ater

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om

ple

me

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rity

bet

we

en

v

ario

us

secto

rs

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i

nfra

str

uc t

ure

T

her

e

is

a

n

eed

fora

grea

ter

bro

ad

-

b

ase

d

dis

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ssio

n

on

the

imp

era

tive

s

o

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inf

ras

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tur

e

i

n

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re

as

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rw

ise

it

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ill

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com

e a

l

imi

ting

f

ac to

r

fo

r

gro

wth

.

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TS

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dry

docking

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ship

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00

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ministr

y

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major

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orts

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n

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s

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re

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r

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t

costs

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then

the

difference

should

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recoverable

from

the

government

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nor

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freight

c

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s

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t

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res

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IF

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(

NFRASTRUCTUKE

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i n

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either

mode

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another

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the

objective

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w

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flexibility

of diesel

traction

is

Us

main

advantage

Diesel

traction is

highly

flexible

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nsChj

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indent

nesdu

up

,

if

our of

pd i

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j

a

poliiS

f

IR

.

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ill

lower

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ith

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traction.

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*

and

gcgrepl

,

-

,

,

ic

areas

ec

to

both

the

adiipwble

to future

technological

advancements

such as

the

'

fuel

cell

’

technology

posed

as

j

promising

alternative source

of

energy

in the

near

future

.

Under

this

technology

,

a

simple

device

combines

hydrogen from

a

variety

of

fuels with

oxygen from

air

to

produce

electricity

This requires

no

moving

parts

,

and does

not

produce

noise

or

smoke

.

Diesel

locomotives

can

be

easily

converted

by

replacing

engine with fuel cell

.

According

to the

International

Railway

Journal

,

fuel

cell trains

shall

be

a

reality

in

the

near

future

.

All

overhead

wires will then

become

redundant

A

breakthrough

has

already

been

achieved

by

BHEl

,

Hyderabad

.

As and

when

it is

imbibed

all

controversies

around

diesel

versus

electric

traction would cease

.

It is

ofvital

importance

that

for the

moment

,

we

do

not

ignore

the

fact

that

both diesel

as

well

as electric

traction

can

meet

the needs

of

the

1R

with

equal

efficiency

.

IF

electric

traction

Has a

high

capital

cost

,

diesel traction

is

highly

sensitive

to

diesel

prices

.

Had diesel

prices

been

that

of

the

eighties

,

one

could

say

diesel

i

preferable

but

not at

today

’

s

prices

.

Thus

,

there

should

be

no

attempt

at

developing

one

mode at

die

cost of the

other

.

Whatever

is the

mode

of

movement

either

by

road

or

rail

,

the entire

logistics

sector has

a

large

number

of

inefficiencies

,

as

a result

the

cost of

logistics

in

India

remains

high

at

13

-

14

per

cent

of

GDP

as

against

7

-

S

per

cent

of

GDP

in

developed

countries

including

China

.

Remedial

Measures

First

and the foremost

arc

the

passenger

fares

that

need

to

be

raised

to

cover

costs

of

*

t

Jj

J

t

_

«

.

AvifVL

i

kf

>

I

r

,

r

5t

me

roremosi

«

ue

sue

0

-

3

^

'

I

°

Pefat

'

ons

especially

for

steeper

class

in

general

.

Higher

classes

should

be

seen

from

the

-

v

-

i

il

commercial

angle

and

not

as

part

of

social

responsibility

If

at

al l

,

any

cross subsidization

1 J

m

utie

*

*

e

Z

JM

1

ol

a

?

,

“

mirncrcr

.

il

angle

anti

nor

M

YV

»

r

.

should

be

there

,

it

may

be

’

inter

class

'

,

between

sleeper

class

and

the

higher

classes

.

Secondly

,

it

needs

to

streamline

its

freight

operation

and

rafic

the

share

in

freight

Movement to

around

50

per

cent

from

the

present

level

of 35

per

cent

which

can

be

‘

one

through PPP

model

and

wherever

possible

rhrough

privatization

Towards

this

the

f

ovcrnmcnt has

taken

a

few

steps

in

recent

times

.

pnvate

Sector

Participation

,

.

r

,

imin

and

terminal

operations

to

b

'

dian

railways

has announced

opening

up

of

8

and

special

freight

tram

private

firms

.

Under

the

new

private

freight

terimn



industrial

corridor

10

augment

and

create

THE

INDIAN

ECONO

*

*

social

and

physical

infrastructure

on

the

r

(

*

lt

CHA

p T E R

txsr

a

reliable

power

,

qual

^

M

;

mJ

provide

a

globally

eompetirive

environment

conducive

for setring

up

businesses

.

An

Investment

Region

would

be a

specifically

delineated

indnstnal

tegtonwtth

a

nunmrnn

,

area

of

over

200

sq

.

km

(

20

,000

hectares

)

,

while

an I

As

would

be developed

with

*

minimum

area

of

over

100

sq

. km

(

10

,

000

hectares

)

.

As

mentioned

earlier

,

it

is

very

ambirious

project

and

once

completed

it

will

redefine

freight

movement

,

providemultipliers

to

increase

growth

,

create

employment

opportunities

and also

the

beginning

of

making

IR

a

basis for

all

round

development

with

an

efficient

mode

of

state

-

of

-

the

-

art

transportation

facilities

.

Despite

these

recent

initiatives

,

there are

still other issues

which IR

needs to

address

over

a

certain

period

of

time

.

Railways

have to

become

a

part

ofa

holistic

‘

national

logistic

policy

’

covering

all

mode

of

transport

with

linkages

and

complementarities

between

rail

,

road

and

sea

.

Expansion

of

rail

network

should

keep

the

economic

rather

the

political

perspective.

The

government

should

expedite

establishing

rail

links

especially

in

th e

NEstatcs

and

also

with

neighbouring

countries

.

This

would

provide

for

better

links

and

relations

in

and

around

the

region

.

It

should

also

review

the

practice

of

having

a

separate

budget

fo r

railways

,

a

practice

initiated

by

the

British

rule

since

1924

.

Budgetary

allocation

made

to

defense

,

oil

sector

are

much

more

than

allocations

made

to

railways.

By

the

same

token

,

there

should

also

be

a

separate

budget

for

defense

.

Or

is

it

that

IR

is

more

important

than

defense

.

These

are

some

aspects

which

the

government

should

examine

.

To

conclude

,

railways

,

porss

and

roads

have

ro

become

a

parr

of

nrulri

modal

logistic

n

India

,

for

ach

.

ev

.

ng

efficiency,

cur

down

timeand

costs

,

in

tramportaiion

ofgoods from

he

producers

to

the

ultimate

user

both

in

India

and

overseas

an

TRAD

Having

discussc

bring

them

all

t

together

and

al

;

like

India

.

Contempon

growth

a

funct

overall levels

ol

post

-

independi

low

growth

.

Ir

through

this

C

)

Investment

ws

largely

by

the

such

economi

It

may

be

income

and

c

securities

sha

Indian Economy by Sanjeev Verma [Raz Kr]

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