Archive for the ‘public policy’ Category

Money…the root of all evil

“For the love of money is the root of all evil”
(Timothy 6:10, The Bible, King James Version)

The Bible makes it clear that it is not the medium which is evil but the inordinate attraction to it. Before we castigate that poor banknote or coin, let us also reflect that greed is only one of the human failings, on par with envy, fear, lust and anger. And yet, the action of the government of the day to render worthless ₹ 500 and ₹ 1000 denomination notes at the drop of a Prime Minister’s speech has left the common citizen speechless and in the grip of a welter of emotions. The intentions may be good and the purpose may be noble : there is a groundswell of support today for the government’s actions among the chattering classes, even though the silent masses are going through difficult times. But is “black money” so easily tamed? Since there seems to be popular misconceptions about “black money”, its origins and nature, some clarifications are in order.
Black money can refer to a flow or to a stock. It is the activity through which the money is generated which determines whether it is black or white, while the subsequent use of the money determines its colour at that time. For example, a private engineering college accepts a donation in cash from a student and declares only 25% of the amount as received. The remaining 75%, which is held in cash, or converted to other assets (and not declared as income), constitutes black money. If this money is used to pay cash salaries to the college employees, the money gets converted from black to white, since the employees use it for their legitimate monthly expenses. Similarly, undisclosed “black money” income parked abroad (as stock) is converted to a “white money” flow when it legally reenters India as foreign institutional investment from foreign tax havens. The roots of black money can lie where activities are wholly illegal (smuggling, drug dealing, arms transactions), or where the activity is legal, but part or whole of the amount realised is not disclosed, either because there has been some violation of permissible limits (illegal mining, capitation fees) or simply to avoid tax payments of any kind. The mythical metaphor could be Ravana’s ten heads in the Ramayana or the Lernaean Hydra in Greek mythology: chopping off one head would see more heads grow back again. A modern day analogy would be the Jackal, the terrorist tasked with the assassination of President Charles De Gaulle of France. With his multiple stolen passports and the ability to change his appearance to suit the passport photograph, the Jackal evaded stringent police surveillance and was finally stopped in his tracks by a patient, persevering French policeman only after he had managed to take a crack at his target. Black money is similar: just when the enforcement agencies think they have got the beast, it will reappear in a new form elsewhere.

In these days of highly fungible economies, the very processes of economic and government functioning give immense scope for the generation of black money. Since I started this article with a quote from the Bible, it would be appropriate to list the Ten Commandments that the Government of India must follow if the current demonetization drive is to come anywhere near yielding the desired results:
I. Thou shalt make bank accounts mandatory and easily accessible
The innovative idea of the Pradhan Mantri Jan Dhan Yojana (PMJDY) to provide every Indian citizen with a bank account has seen as many as 254 million accounts being opened till November 2016. By the government’s own figures (gathered from banks), nearly 25% of these accounts have zero balance; there is an average of about ₹ 2500 in the remaining accounts. The geographical spread of these accounts would be highly skewed: remote tribal and rural areas are likely to be underserved. It is the poor with no access to bank accounts who have been hardest hit by the demonetization exercise. The significant percentage of zero balance bank accounts is testimony to the fact that bank accounts are still not perceived as useful by the poor, especially where they have little bankable surplus and where bank locations and timings are such that they cannot easily be accessed. Making the opening of a bank account by every citizen above the age of 18 mandatory would popularise the use of banking services and compel hitherto reluctant bankers to actively seek customers. There will still be areas where access to bank branches is difficult, either because of geographical location or, more often, because of timings which do not suit the customer. It is here that the Second Commandment comes into play.
II. Thou shalt actively promote the cashless economy through the use of technology
Mobile wallets and payments through mobile phones and computers using internet and wireless technology can obviate the need to visit banks. Use of point of sale (POS) terminals at all transaction outlets would promote cashless transactions. Money transfers (salaries, etc.) can be done online or using mobile phones. Banking correspondents can ensure needed cash payments from and deposits to customers’ bank accounts. This will need some knowledge of how to use these systems. Having seen how quickly nearly 900 million Indians have mastered the use of mobile phone software, including the use of WhatsApp and the downloading of videos, I do not foresee any problems of adapting to modern technology. There is, of course, still the need to ensure that the temptation to escape the electronic trail is checked…enter the Third Commandment.
III. Thou shalt declare illegal and void any cash transaction exceeding ₹ 10000
Given the Indian propensity for jugaad, all efforts will still be made to evade scrutiny of economic intelligence agencies by going in for over and under the counter cash payments, to avoid payment of direct and indirect taxes. Black money will be converted into holdings in real estate and gold/jewelry. To ensure a clear electronic trail of all transactions, any cash transaction over ₹ 10000 should be made illegal and liable for punitive action, including confiscation. This will also, hopefully, check the widespread and pernicious practice in India of large-scale cash transfers in real estate dealings to evade payment of capital gains tax, stamp duty, registration fees and other related levies.
IV. Thou shalt demonetize ₹ 2000 and ₹ 500 notes
The rationale for introducing ₹ 2000 notes when the lesser denomination of ₹ 1000 has been scrapped has raised many eyebrows: suitcase payments become easier when the number of currency notes required to be packed into the suitcase are reduced by 50%. A strong case can be made for scrapping all currency notes of a denomination greater than ₹ 100. In fact, there is growing support from American economists for withdrawing from circulation the 100 dollar bill which, they feel, helps only drug dealers, terrorists and illicit activities while rarely being used for transactions. India may not be quite in the same cashless economy boat as the USA, but moving the economy in the cashless direction requires demonetization of ₹ 500 and ₹ 2000 currency notes. The presence of currency in only small denominations from ₹ 1 to ₹ 100 would force reluctant merchants to go in for cashless technology. It would also render more difficult the task of using low denomination currency notes in large numbers for high value transactions.
V. Thou shalt make Aadhaar and PAN card details mandatory for all transactions above ₹ 10000
Despite the objections of neo-Luddites opposed to the universal deployment of the Aadhaar card for all, it is heartening that, for schemes like the LPG subsidy transfer, Aadhaar cards are being linked to bank accounts. Since opening a bank account does not require either Aadhaar card registration or PAN card details, there is every scope for diversion of unaccounted for income to benami accounts. What is urgently required is to link Aadhaar and PAN card details and to make PAN details mandatory for any transaction exceeding ₹ 10000. This would check possible misuse of bank accounts which are not on the income tax radar (due to non-availability of PAN details) and would also ensure that non-income taxpayers (like agriculturists) are not used as conduits for undisclosed payments.
VI. Thou shalt discontinue top-level political decisions in all discretionary matters
A major scope for corruption lies in the centralization of decision making powers at the political apex, especially in state governments and local bodies. Whether it is the posting of officers, the permission to start primary schools or the award of contracts for anything from chalk pieces to supplementary nutrition for children to major constructions, the ministerial seal of approval is a must. This has spawned a major corruption industry which enmeshes a significant portion of the bureaucracy as well. We are also often regaled with stories of the MLA or local body corporator who becomes a multimillionaire within a year or two of getting elected. The standard defence is that elections are a costly business, although how that justifies corruption is beyond one’s comprehension. Be that as it may, there is no denying that, apart from lowering administrative efficiency and providing substandard services to the aam aurat/aadmi, high-level political corruption is a significant source of black money, often ploughed back into real estate and conspicuous consumption. Since this is a disease that cuts across political boundaries and is particularly common at state and local government levels, the Government of India must, through a combination of incentives and shaming, compel governments to restructure their governance processes and decentralize decision making powers.
VII. Thou shalt implement a sound public procurement policy
The Government of India had introduced a Public Procurement Bill in 2012 to regulate and ensure transparency in procurement by the central government and its entities. The bill was allowed to lapse and there have been no efforts subsequently to resuscitate it. Most state governments have no public procurement policy or legislation in place. Even in the few states where such legislation has been passed, its effectiveness has never been assessed. Since, apart from administrative postings and patronage in resource allocation, public procurement is the greatest source of political and bureaucratic corruption, some urgent action on this front is essential to check amassing of illegal wealth by the politician-bureaucrat-businessman trinity.
VIII. Thou shalt eliminate the inspector raj through online processes
The permit-license raj was curtailed in 1991; unfortunately, the then government lost steam before the death blow could be delivered to the inspector raj. There are still too many ‘inspectors’ in local bodies, police, road transport, liquor licensing, education, industry and labour welfare, whose major function appears to be the collection of economic rent, for themselves and those above them in the government hierarchy. Some streamlining of licensing processes has taken place but the overall picture is still one where the inspector-tout system flourishes: just visit any Regional Transport Office and see for yourself. This corruption has two “black money” aspects: firstly, the unlawful gains to the organs of the state and, secondly and more dangerously, the operation of a parallel economy that can threaten national security and financial stability. Technology is, again, the only answer. As more processes go online, self-certification by licensees and only minimal, essential contact with the human element can help reduce corruption and harassment.
IX. Thou shalt streamline the justice system to deliver just deserts promptly to all bribe-takers, bribe-givers, tax evaders and hawala traders
As an American jurist put it “The millstones of justice turn exceedingly slow, but grind exceedingly fine”. Justice in India often seems inordinately long in coming. It is rather ironic that, in recent times, a public prosecutor of Indian origin investigated and secured the conviction of two well-known individuals of Indian origin on charges of insider trading in a matter of four years in the USA. While we may not all support his approach, it is a fact that high profile cases involving top political and bureaucratic functionaries in the previous central government are still far from closure even in the trial court. Lengthy, tortuous legal processes not only breed cynicism in the populace at large (not a healthy sign for a democracy) but also embolden lawbreakers with political and economic clout. Sincere and speedy implementation of the provisions of the Benami Transactions (Prohibition) Act, Prevention of Money Laundering Act, Prevention of Corruption Act and related legislation will show that the government means business. Along with the government, the judiciary also needs to tighten its processes and dispense justice fairly and speedily.
X. Thou shalt ensure that all elections are funded only through legal contributions and that all transactions relating to elections are closely monitored
The final Commandment covers a subject which is at the foundation of the efforts to tackle the genesis of black money: electoral corruption. Election funding is itself a small portion of the black money generated. But the politician-businessman nexus that unaccounted election funding sustains has deleterious long-term implications for the economy as well as for the credibility of democracy in the eyes of the people. There are politicians who proudly claim that they have never enriched themselves personally but have taken money only for their political party. Political parties have never been required to account for the sources of their funds and have stubbornly resisted efforts to bring them within the ambit of the Right To Information Act. Demonetization should bring about a situation where all receipts and all expenditures, small or big, by parties and their candidates can be electronically tracked. This will give the Election Expenditure Observers far more teeth than they have at present. With rigorous monitoring of electoral expenses, the last fig leaf for justifying corruption before, during and after elections will be gone.

I write this piece at a time when the nation is probably going through one of its greatest phases of turmoil since independence, rivalled only by the churning of the polity in the closing months of the Emergency in 1977. As one who lived for over a decade in the vicinity of Muhammad Bin Tughlaq’s aborted capital of Daulatabad, his other aborted experiment with currency comes to my mind. Of course, 2016 is not 1333 and we are not minting brass and copper coins, though the flimsy quality of the Rs. 2000 currency note makes me slightly apprehensive. There will always be insinuations that raw political calculations dictated the demonetization decision. The current pains that large sections of the population are going through could have been mitigated somewhat if some of the Ten Commandments had been implemented prior to the “surgical strike” on the currency. As matters now stand, systemic changes on the lines suggested above would give the government some victories on the black money front in the months and years to come. Human greed will remain, the craze for conspicuous consumption and the Big Fat Indian Wedding will continue unabated and the Cayman Islands and other tax havens will always beckon those with an insatiable appetite for moolah. But the government would at least have the satisfaction that it made earning a fast buck that much tougher for those who are never going to respect the rule of law, while also ensuring that it does not make the wretched life of the common (wo)man even more wretched.

Palghar – lessons for Maharashtra (and other states)

It was that time of the year again…the rains came and, with them, the sense of déjà vu that stories of child deaths in tribal areas of Maharashtra evoke in the public mind. The procession seems endless: Melghat in the 1990s, then Nandurbar in the first decade of this century and now Palghar in the second decade of the twenty first century. The political and administrative actors have changed in the intervening years, economic and social changes have taken place in town and countryside but the same problem seems to return to haunt us with a recurring, almost numbing regularity. Opposition politicians (who seem to forget that they were in power for a decade and a half till very recently) are ready with their criticism of the first two years of the present ruling dispensation. The usual knee-jerk reactions are on full display, with Ministers of the concerned departments undertaking flying visits to the affected areas and attempts being made to rope in the medical fraternity, nonprofits and civil society to tackle the problem. Unfortunately, there is no well thought out strategy to tackle the problem of child malnutrition on a long-term basis, whether it be in Maharashtra or in any other state in India. It might, therefore, be apposite to outline what should not be the focus of public policy in the immediate future — both short and medium-term — and what strategy could yield handsome dividends in the next few years.

What is definitely a losing proposition is the obsessive focus on the centralised supply of nutrition to affected mothers and children. There seems to be a misconceived notion (at various levels of government, nonprofits and civil society) that augmenting supplementary nutrition to mothers and children through the existing channels of the Integrated Child Development Services (ICDS) system will help matters. The past (and more recent) history of state-directed and centralised nutrition provision through the ICDS system has been controversial, with repeated attempts (across many states) to circumvent the Supreme Court-directed policy of empowering local communities and families to meet the nutrition requirements of their mothers and children. The experience, over the last one year, of the Abdul Kalam Amrut Aahar Yojana in Maharashtra, aimed at providing one hot cooked meal to pregnant mothers and to nursing mothers in the first three months after delivery, has not been very heartening either, given the less than enthusiastic involvement of the ICDS machinery and the glitches in timely fund allocation to local committees tasked with provision of the nutritious meal. Since the National Food Security Act, 2013 has mandated a cash maternity entitlement of Rs. 6000 to mothers, in addition to access to food supplies through the Public Distribution System and through specific nutrition programmes for pregnant and nursing mothers, the possibility of cash transfer of the entire entitlement to women through Aadhaar-linked bank accounts needs to be closely looked at. This would not only check programme leakages but also reduce wasteful expenditure on overheads on state-run programmes. However, this requires a separate study, so the issue will not be further pursued here.

Reducing chronic malnutrition in under-5 (“U5”) children is a process that involves factors like accelerated economic development and the behavioural changes that rising income levels bring. But, rather than passively waiting for economic development to reduce child malnutrition, governments (and their extensive machineries) can take proactive steps in the short-term to reduce acute malnutrition (and the accompanying mortality) in U5 children. This article focuses on these measures.

The first step is the use of real-time, accurate data, based on anthropomorphic indicators, to get a grip on the exact geographical regions (going right down to every individual anganwadi) where child malnutrition levels are highest, be they remote tribal hamlets or congested urban slums. Currently, monthly recording of weight for age (based on the WHO growth norms) is the only criterion used to assess child undernutrition in the ICDS. This exercise is carried out (if at all) perfunctorily in anganwadis in most states in India. In any case, no systematic analysis of this data, for policy planning and implementation purposes, is undertaken by any official of the departments or directorates/commissionerates tasked with improving the status of child nutrition in India. What is needed is a rigorous exercise to weigh all children in the state every month. If this is not done monthly for logistic reasons (although required as per the existing job chart of the anganwadi worker), weights of all U5 children should be scrupulously recorded at least once in two months. The Jatak software, already developed for use in some areas of Maharashtra, Kerala and West Bengal, would enable porting child weight data online through use of interactive voice response systems and obtaining immediate anganwadi-wise data on the number of severely underweight (SUW) U5 children.

Step number two would involve the lists of these SUW children (anganwadi-wise) being made available online (through a web-based health module linked to the Jatak SUW child data) to the Primary Health Centres (PHC) in whose area the anganwadi falls. The Auxiliary Nurse Midwives (ANMs) and Accredited Social Health Activists (ASHAs) working in a PHC area would then record the height/length and weight of each U5 SUW child in the health sub-centre area, with this data being subsequently ported into the health module. The software would automatically provide to the PHC, anganwadi-wise, the list of U5 children falling in the severe acute malnutrition (SAM) category.

Once the U5 SAM children are identified, they need to be medically examined to assess whether their condition requires them to be admitted to Nutrition Rehabilitation Centres, also termed as Child Treatment Centres (CTCs) and located in Primary Health Centres. Children suffering from environmentally induced diseases (tuberculosis, pneumonia, etc.) or congenital conditions (sickle cell anemia, heart disease, etc.) would be admitted to CTCs. Apart from children requiring treatment at specialist medical facilities, others would stay in the CTCs for a period of up to thirty days. The treatment protocol prescribed by the WHO would be followed to improve the health and nutrition status of these SAM children. It would also be desirable to provide health, hygiene and nutrition education to the caregivers (mostly mothers) who stay with the children in the CTCs, so that there is no relapse in the nutrition status of the children after their return home. Maharashtra had started the salutary practice of providing an allowance to the caregiver staying with the child in the CTC to compensate for loss in wages; this was an added incentive to ensure that children were admitted to and underwent the full course of treatment in the CTCs.  Monitoring of the health and nutrition status of these children by health workers needs to be done regularly for one year after their discharge from the CTC to ensure there is no relapse.

Children in the SAM category not requiring medical attention can, along with children in the moderate acute malnutrition (MAM) category, attend the Village Child Development Centres (VCDCs) at the local anganwadis to receive supplementary nutrition at two hour intervals in accordance with a laid-down nutrition protocol. As the pioneer in developing the VCDC concept, which has been internationally acclaimed, it is unfortunate that the Government of Maharashtra has not financially supported this initiative for the past three years.

Zeroing in on the geographical areas with the worst incidence of severe wasting (SAM) in U5 children would definitely reduce child mortality, given that SAM children have a mortality rate over nine times as high as children in the normal category. It would also check the impairment of cognitive and physical capabilities of U5 children, enabling them to lead fuller, more productive lives as adults. The tragedy lies in the failure of governments in India to systematically adopt the approach outlined above. My experience as Director General of Maharashtra’s Rajmata Jijau Health and Nutrition Mission is that, when U5 child mortality occurs, no attempt is made to trace the case history of such children: specifically, their nutrition and health status in the months before their death and whether any efforts were made to improve this status. A systematic use of real-time U5 children nutrition data to enable focused health and nutrition interventions followed by rigorous monitoring of treated children on an ongoing basis would help reduce mortality rates. Even using the current ICDS projectwise monthly progress reports (MPRs) on U5 children nutrition status (in terms of child weights) would give some idea of the areas in a state most prone to child malnutrition. If we examine the latest available ICDS MPR for Maharashtra for March 2016 (available at www.icds.gov.in), we observe that the ICDS projects with the highest percentages of severely underweight children are largely located in the tribal pockets in the districts of Palghar, Nandurbar, Amravati, Nasik and Gadchiroli, the very areas which have been at the centre of child death controversies for over two decades. If all the ten states of India with a percentage of SUW children over 10 percent of the U5 child population, as revealed by the 2013-14 Rapid Survey on Children (RSOC) data released by the Ministry of Women and Child Development, Government of India, were to rigorously monitor the monthly weights of children, they can put in place strategies to tackle SAM and reduce mortality in U5 children in the high burden areas.

India has the rather dubious distinction of being ranked 120 out of 130 countries in the prevalence of wasting in U5 children (Global Nutrition Report 2016). The 2015-16 National Family Health Survey (NFHS-4) shows that large states like Maharashtra and Madhya Pradesh have as many as 14 (out of 35) and 23 (out of 50) districts respectively with a severe wasting (SAM) rate of over 10 percent of the U5 child population, while U5 child mortality rates are as high as 58 and 65 (per 1000 live births) respectively for Bihar and Madhya Pradesh. So what holds our governance systems back from taking positive, proactive steps? Firstly, a complete absence of focus on what is the extent of the problem, where the problem exists and what policy measures are needed. Secondly, a failure to enforce accountability (in the ICDS and public health bureaucracies) for high rates of child malnutrition and mortality. And, finally, indifference to the debilitating consequences of child malnutrition, which society and the polity contribute to through inaction on a variety of fronts and a lack of compassion.

Improving child nutrition: the way ahead for Maharashtra

The recently released National Family Health Survey (NFHS-4) data on maternal and child health and nutrition outcomes in Maharashtra provides sobering food for thought. This data does not provide the cheer that the 2012 UNICEF Comprehensive Survey on Nutrition in Maharashtra (CNSM 2012) brought to Maharashtra, with the showing of a stunning reduction in under-2 child stunting rates (between 2006 and 2012) from 39% to 23% and a corresponding reduction in under-2 child underweight rates from 30% to 22%. The NFHS-4 figures, which cover under-5 children, show a reduction in stunting from 46% to 34% and in underweight from 37% to just 36% over a ten-year period between 2005 and 2015. More tellingly, the NFHS-4 data reveals that high malnutrition rates are not a feature only in predominantly tribal districts; districts like Parbhani and Yavatmal (with tribal population percentages of 2.2% and 18.5% respectively) show stunting rates over 45%. As many as 13 districts in the state show underweight percentages in excess of 40%. What is disquieting is the fact that districts in Vidarbha, like Buldhana and Washim (apart from Yavatmal), and in Marathwada, like Jalna and Osmanabad (apart from Parbhani), show a high percentage of underweight children. Considering that the campaign to reduce child malnutrition in Maharashtra had its beginnings in Marathwada in 2002, the regression in performance of districts in this region indicates that the gains in child nutrition in the first ten years of this century seem to have been lost in the past few years.

Another noticeable feature of the NFHS-4 data for Maharashtra is the variance of its figures from the ICDS monthly progress reports (MPRs) of the corresponding period. Since the NFHS-4 survey was carried out in mid-2015, a comparison of district-wise under-5 children underweight percentages as shown in the June 2015 ICDS MPR was made with the district-wise figures of the NFHS-4 data. The analysis shows that as many as 20 districts showed ICDS MPR underweight percentages which were more than 25 percentage points below the corresponding NFHS-4 percentages (Table 1). Unless one wishes to contest the accuracy of the results of the NFHS-4 sample survey, the only conclusion that can be drawn is that the ICDS MPR figures are understated. My personal experience, as a former Director General of Maharashtra’s Rajmata Jijau Mother Child Health and Nutrition Mission (“the Mission”), is that there is generally a tendency, on the part of the ICDS machinery (not just in Maharashtra, but in most states) to underreport underweight numbers, both because of lack of emphasis on accurate growth monitoring, as also to avoid criticism.

TABLE 1: MAHARASHTRA – STATE AND DISTRICT VARIATIONS IN UNDERWEIGHT PERCENTAGES

 

District NFHS-4 Under-5 under-weight (%) ICDS MPR June 2015 figures (MUW+ SUW) (%) Variation between NFHS-4 and ICDS (%)
Ahmednagar 31.1 11.15 19.95
Akola 39.3 7.13 32.17
Amravati 33 16.02 16.98
Aurangabad 36 7.99 28.01
Bhandara 32.5 4.99 27.51
Beed 36.9 7.84 29.06
Buldhana 41.3 10.21 31.09
Chandrapur 40.3 16.06 24.24
Dhule 47.5 11.56 35.94
Gadchiroli 42.1 19.98 22.12
Gondia 40.1 7.42 32.68
Hingoli 36.9 9.82 27.08
Jalgaon 36.4 12.78 23.62
Jalna 43.6 7.50 36.10
Kolhapur 31.2 4.30 26.90
Latur 34.5 6.26 28.24
Mumbai 22.7 17.81 NA
Mumbai Suburban 28.9
Nagpur 33.6 11.83 21.77
Nanded 34.4 6.68 27.72
Nandurbar 55.4 31.05 24.35
Nashik 42.9 10.64 32.26
Osmanabad 44.5 8.80 35.70
Parbhani 42.3 7.37 34.93
Pune 25.6 8.64 16.96
Raigarh 38.6 6.01 32.59
Ratnagiri 28.9 8.24 20.66
Sangli 24.8 3.87 20.93
Satara 27.8 7.93 19.87
Sindhudurg 25.2 11.85 13.35
Solapur 34.6 6.58 28.02
Thane 40.3 17.21 23.09
Wardha 36.1 9.73 26.37
Washim 42.9 6.51 36.39
Yavatmal 49.1 8.79 40.31
Maharashtra State 36.0 10.55 25.45

Sources: NFHS-4 (2015-16) and Maharashtra ICDS MPR (June 2015)

 The above analysis becomes even more relevant in the context of the recent furore over child deaths in Palghar district (newly carved in 2014 out of the existing Thane district and comprising the predominantly tribal-populated talukas), attributed to the high child malnutrition rates in this tribal region. Why has this state of affairs come about in a state which, barely a few years ago, was in the forefront of efforts to reduce child malnutrition and whose achievements gained national and international recognition?

Over the last five years, during the second phase of the Mission, there was a move away from data monitoring at a disaggregated level ranging from the district down to the Anganwadi. The Mission focused on behavioural change processes at community and family levels and on pilot initiatives to promote nutrition-sensitive projects in association with corporates/nonprofits. While these yielded results at the micro-level, there was no specific focus on scaling up these initiatives or ensuring their sustainability. More importantly, the emphasis on strengthening health and nutrition systems at the cutting edge levels, a significant feature of the operations of the first phase of the Mission, was not stressed in the second phase. Neither was there systematic follow up of the under-5 child nutrition status at the ICDS project level, a measure which is crucial to monitor the high malnutrition burden areas. With little pressure on them to monitor or ensure achievement of key nutrition outcomes, the ICDS machinery at the Zilla Parishad level and below paid little attention to outcomes.

There was also a diminution in the role of the Mission in terms of coordinating the nutrition-specific and nutrition-sensitive activities of different government departments. Departments continued to function in their respective silos; even fundamental activities like the medical facility based treatment of severe acute malnutrition and the community management of acute malnutrition suffered setbacks on account of budgetary cuts and what can only be termed as the absence of a clear policy focus. The lack of coordination in the nutrition-sensitive/specific programmes of different departments is manifest even to date in the manner of implementation of the Abdul Kalam Amrut Aahar Yojana, a maternal nutrition scheme aimed at pregnant and nursing mothers. The ICDS machinery is yet to wholeheartedly take responsibility for making this programme a success; delayed fund transfers to the village level and failure to put in place effective monitoring systems continue to bedevil the programme even a full year after its commencement. Few systematic reviews of the child malnutrition position have been undertaken at the apex levels of the political and administrative hierarchies in recent years.

The need for a mission approach to tackling child malnutrition in Maharashtra arose in the early 2000s out of the perceived inability of the ICDS machinery to make a significant impact on reducing child malnutrition despite almost three decades of its existence: its overwhelming focus on supplementary nutrition, the lack of attention to under-3 children and the failure to adopt a data-based implementation strategy. Frequent transfers of officers at the helm of affairs of the ICDS and the Department of Women & Child Development (DWCD) and absence of accountability for outcomes have bred a “business as usual” approach. The situation on the ground has deteriorated to the extent that over 70% of posts of Child Development Project Officers, the lynchpin of the ICDS programme, lie vacant today, with the DWCD apparently unable to draw up a recruitment policy for this crucial post. The creation of the Mission was expected to engender a sense of purpose in the ICDS, improve its coordination of activities with other departments and enforce accountability for measurable outcomes. This approach, largely successful in the first phase of the Mission till 2010, has been diluted greatly in the second phase.

As matters stand, the government of the day, despite having in hand a clear proposal on the modalities for launching the third phase of the Mission, has not been able to take a decision for over eighteen months. Current thinking seems to be in favour of subsuming the operations of the Mission within the ICDS Commissionerate, a move that will make the Mission a toothless entity and, in effect, ensure a regression to the status quo prevailing prior to 2005.

Ultimately, any structure to tackle child malnutrition can only be effective if it is staffed with personnel with the passion and commitment to make a difference. The indifferent experience of a number of other states that launched Nutrition Missions based on the Maharashtra model is a clear indication that standard bureaucratic interventions will not work. Maharashtra is free to experiment with any governance structure for addressing the issue of child malnutrition. There are, however, certain fundamental steps that are a sine qua non for making a significant dent on the problem:

  • Accurate, real-time data has to be the basis for a strategic approach. Both the health department and the ICDS need to use technology to gather real-time data on maternal and child health and nutrition to strengthen systems to tackle underlying causes. Maharashtra made a beginning in 2011-2012 using the Janani and Jatak software systems for individual mother and child tracking to monitor maternal and child health and nutrition outcomes with a view to build service delivery capabilities of the health and ICDS systems. Unfortunately, both departments have not made use of these softwares, specifically customized for Maharashtra, to aid them in efficient service delivery.
  • A far greater sense of accountability needs to be enforced in the ICDS and public health systems, as well as in other departments with a role to play in reduction of child malnutrition and mortality, from the Secretariat to the village level. A clear political message needs to go out that the death of even one child or the continued prevalence of stunting, underweight and wasting in under-5 children will not be tolerated.
  • Whether as a Mission or as a high-level council under the Chief Minister, there needs to be an organisational structure that coordinates the activities of government departments/agencies, nonprofits and civil society organisations. This body would plan strategies for high incidence areas, garner financial and other resources for tackling malnutrition, help develop innovative, sustainable programmes and set time-bound, measurable goals.

 

 

 

 

 

 

 

 

Reaping the wages of state oligopoly/monopoly

I recently read a lament by India’s Surface Transport Minister, Nitin Gadkari, on how vested interests were thwarting the passage of the Road Transport and Safety Bill in Parliament. One would have thought that legislation aimed at reducing India’s horrendous record of road fatalities/injuries (1,50,000 fatalities and over 5,00,000 injured in the calendar year 2015 alone) would have received widespread support and would have passed through both Houses of Parliament in a jiffy . Alas, this bill languishes, like many others, while the God of Death continues to add to his numbers. And the sneaking suspicion lingers that powerful lobbies are at work to forestall the coming of this law. The commercial road transport lobby is against any measures that would require them to invest in new, safer transport vehicles. The bare-headed idiot wants to ride his scooter/motorcycle without the impediment of protective headgear, blissfully oblivious to the implications for his life and the future of his family. Above all, the state road transport authorities are totally averse to what they see as this encroachment on their divine right to extract economic rent from the licensing and operation of motor vehicles, which is why the transport portfolio is one of the most sought after by politicians. This huge state oligopoly (actually a monopoly in any one state) has been responsible for a large part of the mess in India’s road transport sector. Visit any state road transport office and you can hardly miss the ubiquitous tout peddling his wares in full public view. Every service has a price, whether it is the registration of a new vehicle, the transfer of vehicle registration from one state to another or the issue/renewal of driving licenses. No wonder even the Minister admits that at least 30% of driving licenses (almost certainly an underestimate) are wrongly issued. The road transport imbroglio goes even further. A mobile, globalised economy requires frequent labour movements. But move to another state with your vehicle and the authorities are after you to pay your lifetime road tax afresh in the new state. Take a private taxi from one state to another state and you end up paying for the privilege of entering that other state: an amount that varies from ₹ 1000 for Andhra Pradesh to ₹7000 for Maharashtra. Road transport checkpoints (along with other state monopoly agencies extracting their pound of flesh) are responsible for interminable delays in shipments to other countries and adversely affect India’s export competitiveness. But who cares: certainly not state governments, which are interested only in short-term revenue collection.

Things are only marginally better in the sector that fuels the transport sector. In spite of valiant efforts by reform-minded administrators to introduce free markets in this sector, supply of petroleum products has remained the preserve mostly of the three public sector marketing giants. Political patronage played a significant role in the allotment of dealerships in petrol pumps and cooking gas, a fact which attracted adverse attention of the higher courts about two decades ago. Politically powerful owners of these distribution agencies consider themselves immune to punitive action even when they supply adulterated fuel or indulge in black marketing of cooking gas cylinders. Booking of gas cylinders on phone has certainly been a welcome step and has reduced retail consumer uncertainty on when their supply will be replenished. But there are still areas where service falls woefully short, including the crucial one of safety. If your gas cylinder  or stove develops a leakage after 6 PM, rest assured that you will receive no response till 9 AM the next morning from your gas agency, presuming that the next day is not the weekly off day for your agency. The three distribution companies have provided contact numbers. The problem is that, when you call those numbers, all you get is a polite message informing you that your complaint will be attended to. Even the agency responds in a leisurely manner, three to four hours after they are informed.

The two sectors that meet basic requirements of the citizen, health and education, are prime examples of how state monopoly has impeded the process of economic development and, more importantly, meeting customer needs. The public health system is the only avenue for a large section of the population which cannot afford private health care. Apart from a few islands of excellence, the public healthcare system falls miserably short of the expected standards of effective, good quality service provision. Especially in remote tribal areas (but also elsewhere), doctors just do not turn up for duty; when they do, attention to patients is often perfunctory, if not dismissive. Diagnostic equipment, like x-ray and scan machines, are, when provided, often out of order, generally because of outmoded bureaucratic procedures that prevent timely supply of spares. I speak from personal experience: antenatal care in primary health centres is generally routinely and superficially carried out, with no clear focus on mothers who face high risks at delivery time. Post-delivery, neonatal follow up is extremely poor, with the result that a large proportion of child deaths occur in the first year of birth (of that, a large proportion occurs in the first four weeks after birth). The public health machinery also takes no responsibility for severely malnourished children, disregarding the dictum that prevention is better than cure.

Education is an even more unfortunate example of the malevolent effects of state monopoly. Oligarchies have taken root in this system – the state education bureaucracy and the teachers’ unions. State schools are tightly controlled by the bureaucracy, which decides every aspect from school location and curricula to teacher remuneration and career progression. Unions have resisted efforts to enforce accountability, leading to  the phenomena of absent teachers, poor quality instruction, high dropout rates and unemployable students with limited language and arithmetic skills. Growth of private schools is stifled by the system of recognition by the education department, with its inbuilt tendencies towards patronage and corruption. Higher education also suffers from the stultifying effects of bureaucratisation. Low quality, private education empires, run by those with political muscle, have become the norm, rather than the exception. Even more unfortunate has been the tendency of the state, more so in recent years, to encroach on the autonomy of once reputed public institutions of higher learning by stacking their managements with pliable, political appointees and, increasingly, seeking to dictate the content and pedagogy to be followed by these institutions.

Public service can be efficient and effective only if it adheres to the three basic principles of integrity, professionalism and empathy. Integrity implies both financial probity and a commitment to the outcomes that are sought from the provision of the service. Professionalism requires a clear understanding by those in the system of their tasks and a willingness to discharge their duties honestly and to the best of their abilities. Above all, public service requires the very human quality of empathy, of placing oneself in the shoes of one’s’ less privileged brothers and sisters and understanding what difference the access to high quality public service can make to their lives: as a government functionary, one needs to look behind the file/statistic and visualise the face of the person you are dealing with. Since these attributes are becoming increasingly difficult to inculcate in a bureaucracy that is influenced by the prevailing social values of consumerism and self-centredness, what is required is the introduction of competition (to the extent that it is possible) in every sector of economic and social activity.

Competition has certainly helped in the telecommunications and automobile sectors. The public sector behemoths, BSNL and MTNL, have lost a lot of ground to private telecom operators but their loss has been the consumers’ gain, leading to an explosive growth in mobile communications. Gone are the days when one waited for days for a telephone connection. Nor does one wait patiently month after month for the supply of an Ambassador or Fiat (Premier Padmini) car, or, later on, a Maruti 800 car. Hyundai, Honda, Ford and Toyota cars are available today virtually off the shelf. Of course, there are sectors like utilities (energy and transport) and public goods (education and health), where, because of heavy, long gestation investments, the nature of technology or the impact on human capabilities, some regulations on entry and on quality/price will have to be implemented.

Competition in sectors like health and education can be introduced by providing options, in addition to state-provided ones, to the consumer. These could take the forms of private health care and education provision, as in the case of charter schools in the USA. Unviable or poorly functioning state institutions could also be entrusted to private management, with accountability for performance and sound management. The fundamental aim should be to ensure that public sector providers compete with private parties for funding for providing services of a specified quality (with designated outcomes) at reasonable prices. Provision of cash vouchers for spending on health and education would provide the consumer with the choice of that provider who best meets her expectations. Of course, this will require a high quality of regulation, with the regulators ensuring a level playing field for both parties and monitoring performance and cost of services to the consumer. In the infrastructure and utility sectors, the same principle of competition will have to be applied, with existing public sector providers having to compete for customers with private participants. An auction route is the best method of attracting the best offers, whether from the public or private sectors.

The state has two major responsibilities in such a competitive set up. Firstly, it has to set up autonomous regulatory systems in different sectors that discharge their duties in a fair, impartial manner and ensure the provision of reliable, reasonably priced goods and services to consumers. Secondly, the state also has to work towards providing an environment to public sector providers which gives them the freedom and flexibility to compete in the marketplace, with the clear understanding that there is no guarantee of their survival if they do not perform. It would be in the best interests of all for the state to abide by the maxim “The business of government is not business.”

 

 

 

 

 

The politics of infant mortality…and the tragedy

“There are three kinds of lies – lies, damned lies and statistics”

(Mark Twain: Chapters from My Autobiography)

A recent comment by India’s Prime Minister (PM) during an election speech comparing the infant mortality rate (IMR) in the tribal areas of Kerala state with those in Somalia kicked up a furore. A wounded Chief Minister of Kerala (from the opposing political party) has threatened to sue the PM, though the exact nature of the offence is not clear. Now that the electoral battle in Kerala has been lost and won, it is time we dispassionately analysed the contention of the PM and the implications for health policy in India. Let us first get to the numbers; at 60 deaths per 1000 live births in the tribal areas of Northern and Eastern Kerala, he felt that the area was not lagging far behind the African country of Somalia, which, as per the number he had, registered 85 deaths per 1000 live births in 2015. This is where statistics can be dangerous, and it does not need a Mark Twain to convey this message. Firstly, there seems to be no basis for concluding that the tribal areas of Kerala have an IMR of 60: whether this covers just the tribal population or the districts with a larger proportion of tribal population is not clear. Secondly, the PM’s information feeders seem to have culled the magic number of 85 from the latest country wise estimates of infant mortality released by the UN Inter-agency Group for Child Mortality Estimation (www.childmortality.org). The problem, as with all statistics, lies in the level of confidence reposed by the estimators in their own estimates. In the present case, three sets of numbers are given for each country: low, median and high. While the variation in these three numbers in countries like the United Kingdom with excellent reporting systems is minimal (3.0 to 3.5 to 4.1) and reasonable for a country like India (34.1 to 37.9 to 41.8), the range from the low to high figure is from 53.3 to 143.3, with a median figure of 85, for a country like Somalia with underdeveloped reporting systems. The UNICEF State of the World’s Children Report 2015 gives an IMR of 108 for Somalia and the CIA Fact Book places it at 98, showing that there is no unanimity on the number. With such a vast range of uncertainty regarding the numbers, it would be hazardous to plump for a number like 85 with any degree of confidence. The matter is further complicated when we compare the tribal population of Kerala with that of Somalia – 0.49 million versus 34 million. A small population, especially when it is largely comprised of poor tribals, will display higher figures of mortality in infants, given the prevalence of poverty and the poor reach of essential health services. The law of averages operates as the sizes of populations increase. To give one graphic example: just two infant deaths in a village with a population of 1000 (with an annual population growth rate of 2%) imply an IMR of about 100 per 1000 live births: which is why mortality statistics are never calculated below the district level. As statistics combine disadvantaged with more prosperous areas, these numbers come down, in the case of Kerala state to 12 per 1000 live births, which compares very favourably with many developed country figures.

The tragedy lies in the lessons that are not learnt from areas in Kerala like Wayanad, Idukki and Attappady, Palakkad (in the news a couple of years ago for infant deaths in significant numbers) and the mistakes committed through apathy and misgovernance across much larger swathes of India. Politicians would do well to remember the adage “Those who live in glass houses shouldn’t throw stones”. Of the nine states that are at the top of the high child malnutrition pecking order, seven are presently ruled by the party whose PM has spoken disparagingly about IMR levels in the tribal areas of Kerala, and all nine, including his own state of Gujarat, have or have had BJP governments (either on their own or in alliance with other parties). Barring two states where the BJP has recently come to power, its governments have had ample time to tackle the menace of child malnutrition, which is attributed by experts to contribute at least 45% of child deaths in India (and probably an even greater percentage of infant deaths, given that an overwhelming majority of under-5 children die before they cross the age of one). And yet, it is precisely these states which are the greatest contributors to infant mortality and child malnutrition. Don’t get me wrong: I am not in any way absolving other political parties which have ruled these states for many years without making a significant difference to the problem. The fault, dear Brutus, lies not in our stars, but in ourselves: in our dysfunctional systems, our cavalier disregard of data, our failure to focus on key geographical areas with a high child malnutrition burden and our failure to evolve a coherent, time bound public policy to effectively tackle the problem.

Let us start with our dismal grasp of the magnitude of the problem. Growth monitoring has always been one of the main components of the ICDS strategy right from its inception. Unfortunately, the monthly exercise of weighing of all under-5 children by the Anganwadi Worker (AWW) has been treated mostly as a routine task, with little or no importance being given to the use of this massive body of raw data. In the absence of weighing scales, weighing is sometimes not carried out; where weighing is done, there is no analysis of the data to chart out a meaningful course of remedial action in case of underweight children at any level, whether the anganwadi, ICDS project, district or state. Almost no state posts aggregated data, ICDS project wise, on the nutritional status of children online and it is doubtful if any administrator, at the project, district or state level, pays any attention to this data.

This blissful neglect of valuable data leads to governmental failure to identify and focus attention on the geographical regions requiring urgent, sustained intervention, be they remote tribal areas or congested urban slums. Aggregated data of monthly weights of children helps identify the specific localities (villages, hamlets, slums, etc.) that need to be focused on to reduce the burden of child malnutrition. The common budgetary approach of allocating funds to areas on a child population basis, without weightage for high burden malnutrition areas, discriminates against the latter. Poor infrastructure and inadequate staff in tribal areas lead to underutilisation of even allocated budgets. Resources of different departments are generally not combined in an innovative manner to deliver the crucial health and nutrition (both nutrition-specific and nutrition-sensitive) services to children and women that can reduce undernutrition and mortality. The new methodology of untying central fund releases to states is likely to see even further diminution in fund allocations to politically weak tribal regions of states and to urban slums. Public nutrition and health services for mothers and children are in short supply in urban slums. There are no systematic efforts to reach out to urban communities to develop their capacities to self-manage their nutrition and health issues. This limited attention given to identified high burden geographical areas is likely to see a continuation of high child malnutrition and mortality rates in these areas.

Resource misallocation to this critical area is aggravated by the absence of a clear cut vision on how to most effectively tackle the problem in the short run. India’s policy makers refuse to use height/length of under-5 children as a measure of nutrition status, in addition to weight (which has been used for nearly four decades). This would enable an immediate estimation of wasting (weight/height) status for taking action to improve the health and nutrition status of children suffering from severe acute malnutrition. Software exists to record both anthropometric measures digitally so that the wasting status of any child can be immediately established (a pilot project in Attappady, Kerala has proven the feasibility of such a digital approach to recording data using IVRS technology). Tackling moderate and severe wasting in India’s children (which goes upto 25% in many states) through inpatient and outpatient methods would significantly reduce malnutrition. But India’s ICDS and public health departments are unconvinced that they need to make this programme a key step to reduce child malnutrition and mortality. Adequate international evidence linking child malnutrition (especially wasting) to a higher incidence of mortality has had little to no impact on the thinking processes of the bulk of India’s medical professionals. Governments (at central and state levels) have failed to make such a programme the cornerstone of efforts to reduce malnutrition/mortality. The ICDS Commissionerates/Directorates are obsessed with centralised, contractor-dominated food supplies (rather than child feeding practices and micronutrient interventions), a policy which has drawn much critical comment from the Supreme Court and High Courts (the reasons are not difficult to fathom!). The resultant haphazard, ill-directed programmes to manage malnutrition, with no systematic measurement of nutrition outcomes and no focus on geographical areas most in need of such programmes, are the reason for India’s dismal world ranking in child nutrition indicators.

Finally, there is gross underutilisation of one of the most extensive systems set up anywhere in the world to deal with the issue of maternal and child nutrition — the ICDS. With anywhere from 50,000 to over 100,000 AWWs in each state of India, spread over almost every habitation in the country, this valuable human resource could well be the underpinning for a revolutionary transformation of the child malnutrition scenario in India. Unfortunately, with the ICDS largely functioning as a khichdi kitchen, these workers have never been empowered with the knowledge, skills and resources necessary to fulfil their innate potential. My experience in the nutrition sector in Maharashtra opened my eyes to the fantastic work they can do given the right working environment — upgraded knowledge/skills, access to resources, appreciation for their good work and the development of self-esteem for the important tasks they are undertaking. Even the huge public health system has no specific focus on the preventive aspects of health and good nutrition that could develop a generation of healthy girls and mothers, leading ipso facto to the birth of healthy, normal weight children.

For a country on the cusp of economic power and a growing global presence, it reflects poorly on India that she takes her place among the league of failed and failing nations in indices of child/infant mortality and undernutrition, whenever the exercise of evaluating each country’s performance in these areas is taken up. Latin America and East Asia have left us behind, as they made significant strides over the past few decades. Our immediate southern neighbour, Sri Lanka, is an object lesson to us that improvement in human development indicators can be achieved. Even within India, states like Goa, Kerala, Maharashtra and Tamil Nadu have performed far better than their counterparts in Northern and Eastern India in reducing IMR, though they still need to reduce wasting rates in under-5 children. If “Make in India” is to have any real meaning, children born in India need to have the guarantee of a healthy, disease-free, long and productive life.

 

 

 

 

 

Water, water, everywhere…

Water, water, everywhere, nor any drop to drink

(The Rime of the Ancient Mariner: Samuel Taylor Coleridge)

The Ancient Mariner and his shipmates suffered the consequences of his shooting an albatross; becalmed on the wide ocean, they had no access to drinking water, leading to the death of all the sailors except the Ancient Mariner. An act as wanton as that of the Ancient Mariner today threatens the health (and lives) of millions across the parched plains of peninsular and northern India. The blame for the present predicament lies squarely on man’s nature rather than on Mother Nature. Man has squandered the available sources of surface water and, over the past four decades, has drilled deep into the bowels of the earth to extract every possible drop of water. The present summer represents one of the worst years of water availability for the Marathwada region of Maharashtra. Much publicity has been given to the efforts of many organisations, such as the Indian Railways, to supply water over long distances to Latur city. While all such initiatives are laudable and deserve to be appreciated (even though it appears that the local administration is going to be billed for the supply by the railways), the bitter truth needs to be recognised that these are temporary palliatives for a far more deep rooted crisis, one that threatens man’s very existence. Since I have spent many years of my public life in the Marathwada region in different capacities, it may be appropriate for me to add my two bits to the ongoing debate on the causes for this huge human-ecological crisis that is affecting nearly 20 million people in this region.

Drought has been a recurring pattern in interior Maharashtra in most areas of the rocky Deccan Plateau for centuries. Falling as they do in the rain shadow area between the two monsoons, these areas rely almost entirely on the bounty of the south-west monsoon to meet the food and water needs of their populations. But even Maharashtra’s worst drought in the early 1970s was agriculture rather than water related. The picture changed over the last quarter of the twentieth century with the rapid urbanisation of Maharashtra and the indiscriminate application of water (both surface and ground) for agricultural, especially cash crop, production. The large storage capacities of the Jayakwadi dam at Paithan in Aurangabad district and its sister dam at Majalgaon in Beed district whetted the appetites of the rural elite of Marathwada. Taking a leaf from their confreres in prosperous Western Maharashtra, the landed elite used water as the means to enhance their economic and political power. Sugarcane factories (often badly managed) sprang up in the region, putting strain on both surface and groundwater resources. Water storage in the Jayakwadi reservoir was (and is) crucially dependent on the drinking water and irrigation demands of the politically influential upper riparian districts of Nashik and Ahmednagar. While there are treaties and agreements governing the distribution of river water flows between countries like India and Pakistan and between the different states of India, there are no specified norms dictating the distribution of water between different regions of a state; political compulsions and administrative decisions generally decide the allocation of waters.

Recurrent water scarcity has also created rural-urban tensions in Marathwada. Farmers who are denied water for agricultural purposes resent the diversion of water for industrial and urban needs. When the Jayakwadi irrigation project was commissioned in the 1970s, no one foresaw the extent of demand for water that would emanate from the rapid industrialisation and urbanisation of the sleepy town of Aurangabad. Today, a variety of industries, ranging from consumer goods and beer production to automotive and chemicals, are critically dependent on water from the Jayakwadi dam for their survival. Rationing of water supply to industry in lean years (as the Aurangabad bench of the Bombay High Court has sought to do this season by limiting water supply to the beer production units) runs the risk of affecting industry and industrial employment prospects, more so if water scarcity becomes a recurrent phenomenon. The issue is complicated by the misuse of purified water for non-drinking purposes, including watering gardens and flushing toilets. Aurangabad Municipal Corporation has no rules to restrict the use of costly, purified water for only drinking purposes, with users being mandatorily required to use groundwater or recycled water for other purposes. Shrinking groundwater levels pose their own problems; Beed town, the district headquarters of the politically powerful Beed district, with a population of 1.5 lakhs, was historically famous for its dug wells (Bir, as the district and town were earlier referred to, probably derives its name from vihir, the Marathi word for well). With urbanisation and the supply of piped water, these wells have fallen into disuse, rendering the once water-abundant town vulnerable to surface water availability in the water reservoirs servicing the town. Growing contamination of surface and groundwater by industries and sugar factories, not surprising considering the extremely lax implementation of pollution norms, has further reduced the access to safe groundwater.

As always, human greed and indifference lies at the heart of the problem. Deforestation in the upper reaches of the Godavari River (in the name of development) has led to the accumulation of massive quantities of silt in the major reservoirs. The lure of new capital investments in irrigation facilities (in the contractor-driven raj of modern India) as opposed to investments in reservoir and canal maintenance has reduced the life of these assets and led to the runoff of rainwater that could otherwise have been stored. Most importantly, the “small is beautiful” slogan of Eric Schumacher lies buried under the focus on large irrigation projects. River water projects that were considered technically and financially infeasible in the 1970s and 1980s were taken up in different regions of Maharashtra after the mid-1990s. These projects are yet to see the light of day, given poor planning, inefficient execution and massive corruption. Resources that could have gone into soil and water conservation measures were squandered. Successive governments have dutifully paid lip service to soil/water conservation projects with fanciful names; piecemeal planning and lack of an overall picture for recharging the watersheds in the state mean that there is unlikely to be any meaningful resolution of the water crisis in the foreseeable future.

Is there no solution in sight to this crisis which threatens future generations? There can be, provided the political and administrative will exists to look for imaginative solutions which do not pander to the interests of contractors and their political backers, with the concomitant allocation of adequate financial and human resources. After a continuous three year water crisis in Marathwada from 2001 to 2003, the Marathwada administration, in collaboration with NGOs working in the soil/water conservation sector proposed to the state government a massive plan for systematic watershed planning and implementation of a slew of soil conservation measures, including afforestation, contour bunding, check dams and field ponds, that would involve local communities in the programme. Given the scale of the task, it was obvious that relying on rural employment programmes like the MGNREGA would not do, given that the skilled component in terms of machine-intensive jobs would require relaxation of the specified norms for percentage expenditure on labour. It was, therefore, proposed that rural employment funds could be tapped for the components that could be largely implemented using local labour, with the government budgeting for capital-intensive investments in machinery and skilled operations. This proposal never took off and, for all I know, is still lying in the dusty archives of the Government of Maharashtra. Such initiatives are desperately needed to look for long-term solutions to the mess we have landed ourselves in.

Ad nauseam, we are told that it is better to teach a man to fish rather than giving him a fish to eat, since the former course of action is a lifelong investment. Similarly, it is far better to recharge the earth’s water reserves rather than rely on nature alone to make up for acts of human commission and omission. Marathwada’s districts get, on an average, between 600 and 950 millimetres of rainfall annually. I still remember India’s waterman Rajendra Singh expressing his astonishment that, with so much rainfall, Marathwada could not solve its water problem, when areas in Rajasthan were able to manage with an annual precipitation of barely 300 millimetres. Countries like Israel, with regions like the Negev Desert which receive about 30 millimetres of annual rainfall, have invested in water-saving drip irrigation and desalination technology to meet the needs of their people. Maharashtra, and India, can certainly take inspiration from such examples: time and tide wait for no man.

 

 

Secession of the urban Indian

Amidst all the recent furore over “seditious” behaviour on one of India’s premier university campuses, my mind went to the steady secession of sections of Indian society from the larger populace around them. Now, secession is no laughing matter; any talk of it in the context of a region seeking to separate itself from the republic constitutes a serious crime. And yet, through its actions (or rather inaction), the Indian state itself has been guilty of creating a secessionist mindset in certain groups residing within its frontiers. Before I am hauled up before the guardians of law (one never knows in these hyper-excitable times), let me expand on my theme to set all apprehensions at rest.

I still remember a childhood when those of us living in cities like Delhi, Bombay and Madras received, and enjoyed, the benefits of public services. Electricity came from the local power undertaking and water from the local water board. Those living in Bombay and Madras were fortunate to enjoy good public transport (local train and bus) facilities. We Delhiwallahs were not so lucky; a six kilometre journey from school to home could take anywhere up to two hours, earning the Delhi Transport Undertaking (DTU) the sobriquet Don’t Trust Us. Public health facilities were extensively used: the Central Government Health Scheme (CGHS) for minor illnesses and (in Delhi) public hospitals like Safdarjung and Willingdon (later christened Ram Manohar Lohia) for major ones. The doctors were reputed and trusted by their patients, the nursing staff was dedicated and competent and many of our friends went there for minor and major surgeries. While I don’t even remember seeing a uniformed policeman in our government colony, the friendly Gurkha watchman on his nightly vigil made us feel secure. The seeds of secession were already then being sown in primary and secondary education, though not in higher education: many of us went to private (euphemistically termed public) and missionary schools (with parental confidence in municipal and government schools at a fairly low level) but subsequently to publicly funded universities.

The last quarter of the twentieth century marked the watershed for the transition to a dual society. As the pressure of population grew, with large migrations to urban areas, shortfalls in public services and the unwillingness of better-off sections of the citizenry to live with these infrastructural deficiencies led to the Great Secession. The success of the Indian diaspora and their affluence created envy in their humble country cousins, who had to look forward to the casually tossed out gift on the annual pilgrimage home of the non-resident Indian. 1991 was the first window of opportunity for the great Indian middle class. Easier and cheaper imports, the opening up of the consumer sector to private investment and the information technology boom saw an explosion in the availability of hitherto forbidden fruit, which the Indian consumer was only too eager to acquire and consume. Money is the medium for the transfer of goods and services from the hitherto totally public domain to private enclaves of wealth and prosperity. As living standards improve for a growing middle class with aspirations to the “good life”, it would be instructive to examine how this stratification has worked in different sectors of services and how it has had its impact not just on the wealthier classes but also on the common woman/man living in urban settings in India.

Electric power supply has always been the country’s Achilles heel. Rural areas, especially in the more backward northern and eastern regions of the country, have long been inured to the absence of electricity. But urban areas, inhabited by industries and by the relatively wealthier segments of society, would not accept such a scenario. Industries went in for diesel generator sets and, where possible, captive power generation. Households followed suit very soon; as disposable incomes went up, generator sets made their appearance in private residences and housing societies. Even after the initiation of power sector reforms in the early 2000s, the scenario is yet to change, with problems persisting in all the three sectors of electricity generation, transmission and distribution. A nuclear deal was concluded, but power from nuclear plants still seems a distant dream. Oh, of course, there has been a lot of talk but, as yet, only limited progress on the renewable energy front, the inspiring example of countries like Germany notwithstanding. Bengaluru, India’s IT capital, sees its citizens stoically settling down to power cuts of three to five hours daily, while its energy policy makers scramble for excuses like low water supply positions in reservoirs.

Drinking water supply poses a major issue everywhere, and not just in years of scanty rainfall. Politicians and bureaucrats have failed to anticipate the demand for this crucial, life-giving resource, not just in rapidly growing urban centres, but also in rural areas, where water supply is fast depleting. There are a variety of reasons for this critical situation, best summed up as “the triumph of private greed over public need.” What is glaringly evident is the absence of any long-term planning for urban water management. No efforts have been made to recycle wastewater for use for non-drinking purposes, nor is there any coherent policy in place to desalinate seawater, on the lines of countries like Israel, Saudi Arabia and the United States. The only ones laughing all the way to the bank are the bottled water companies, which are the major drinking water supply source to populations in cities like Chennai and Bengaluru. With a steadily worsening groundwater scenario, water tankers are the order of the day in every metropolitan area. The urban poor have to make do with the trickle that comes from their public taps or fight for access to the tankers that service their areas.

The steady deterioration of public health services has, over the years, put an enormous financial burden on the aam aurat/aadmi. Money is again the feature that distinguishes the quality of services for the rich and the poor. Corporate, multi-specialty hospitals with state of the art technology are available to those who can pay, while the poor flock to already overloaded public hospitals. The average citizen has come to distrust the medical attention she can expect to get in public health institutions, forcing her to get into debt to meet the costs of private medical care. A moribund public health care system functions (??) under the benign gaze of governments (both central and state) and a controversial Medical Council of India.

Public transport, almost the only commuting option a couple of generations ago, is probably the most striking example of the widening chasm between the rich and the poor. City transport systems have come under immense strain, even as private car registration figures shoot up. Mumbai’s famed local trains are groaning under the sheer weight of numbers and even the Mumbai bus system (BEST) is not quite what it used to be. Indian city roads have, of course, proved to be somewhat of a social leveler — the potholes on the roads are no respecter of private or public transport modes and congested thoroughfares allow for no distinctions in time spent on travel, regardless of whether you are in a BMW or on a city bus. The Delhi Metro has been the only bright spot in an otherwise abysmal tale of stalled public rail transport and Bus Rapid Transit systems in nearly all Indian cities.

Most unfortunate has been the privatisation of security systems as inadequate police forces battle with multiple responsibilities in the diverse areas of criminal investigation, law and order maintenance and VIP security. It is bad enough when housing becomes segregated (although the coexistence of prosperity and squalor serve as reminders that “no man is an island”). It is worse when these residential islands also shut off the rest of humanity (including visitors’ vehicles) and seek protection behind high walls and iron gates. As the perception of individual insecurity grows, those who are well-off but not fortunate enough to be provided taxpayer-funded security go in for their private armies of security guards. The aam aurat is left to manage on her own against antisocial elements, with no beat patrolling by constables in even crowded localities.

The final act in this secession drama is the scramble for job opportunities overseas. The earlier flight to the Gulf at least saw many of the migrants return home to better living standards in states like Kerala. The subsequent exodus to the West, especially the United Kingdom and the United States, and other areas in South-East Asia and Australia, has been rather more one-way traffic. While there is the feeling in expatriates of a homeland lost, there is also the realistic recognition that India still cannot offer the same opportunities for innovative thinking and risk taking that many other countries both to the east and west of us offer. If you don’t believe me, ask a budding research scholar in any university or an entrepreneur starting a new venture. It should occasion no surprise that India’s only Nobel award in the basic sciences came during British rule (C. V. Raman, 1930). Indians have since won Nobel awards in the basic sciences, but their research has been conducted in foreign institutions.

Ultimately, the issue boils down to the pursuit of excellence. Islands of excellence in the country still float in a sea of mediocrity, a consequence of unimaginative education systems, blatant patronage based on ethnic and other considerations and an acceptance of sloppy, disinterested performance. Perhaps we should heed the prescient words of John Gardner, Secretary of Health, Education and Welfare in the Lyndon Johnson administration “The society which scorns excellence in plumbing as a humble activity and tolerates shoddiness in philosophy because it is an exalted activity will have neither good plumbing nor good philosophy: neither its pipes nor its theories will hold water.

 

 

 

 

 

 

Centralization – The bane of governance in India

Any newly born nation nurses a sense of insecurity, more so since the nation state is a relatively recent phenomenon in human history. There are also enough doomsayers hovering around with their dire prophecies. The Indian nation-state has had more than its fair share of such pessimistic prophets in the early decades after independence. It also had to contend with the aftermath of the Partition and the amalgamation into the Indian Union of over five hundred princely states, not all of them exactly ecstatic about the prospect. There was, therefore, an overwhelming opinion in the then leaders of the Indian government that, given the daunting challenges faced by the nascent Indian state on the economic, social and political fronts, a strong centre was a prerequisite for not just the development of, but even the survival of India as an independent nation. Not surprisingly, the Indian republic came to be categorised as “a unitary state with federal features.”

Interesting though it is as a subject, this article is not focusing on the political aspects of centralisation but rather on the impact on governance of such centralisation of powers. It needs to be made clear that concentration of powers is a vice that affects every political formation, indeed every organisation that operates in the public and private spheres in India. It is also an accepted axiom that each level of government is in favour of devolution of administrative and financial authority only upto its own level. Thus, while state governments, especially of different political persuasions from the government at the central level, have harped, right from Tamil Nadu in the late 1960s, on greater devolution of powers to them, they have been conspicuously silent when it comes to devolving powers to local governments. The three experiments in democratic decentralization in the states of Gujarat, Maharashtra and Karnataka have been aborted over time to protect the economic and political interests of state-level politicians. The implications for governance, especially at the level of the aam aurat/aadmi, have not been exactly salubrious.

There are both charitable and uncharitable explanations for the propensity to centralize economic and political powers. The “charitable” ones include:

  • the colonial mindset, prevalent to this day, that the natives are not fit to govern themselves. Politicians and bureaucrats, at central and state levels, never tire of relating horror stories about the misdemeanours of local governments;
  • the mistaken assumption that centralisation of financial powers and procurement decisions lead to savings;
  • the continuing faith in the efficacy of a Soviet-era centralized planning system, where the know-it-all bureaucrat sitting in a cubby hole in Mumbai/Delhi hands out schemes and money to the public.

There are also some “uncharitable” reasons for this love for centralisation:

  • the realisation of the state-level politician that his continued existence depends on justifying his utility to the system. This politician is aware that the emergence of powerful grass root leaders is a threat to his future in politics. This phenomenon, observed in the Indian National Congress since the 1970s, has since percolated to every political party. Devolution of powers to local governments would also obviate the need for top-heavy governments at the central and state levels, thus rendering many politicians jobless;
  • the bureaucracy being seen as a vehicle for guaranteed, lifelong employment, without any accountability for performance. There is the rather patronising belief that bureaucratic interventions can solve all problems, hence the operation of Parkinson’s Law with a vengeance in the Indian government system: staff expands to create more work, with, in fact, a diminution in efficiency. Increasingly, public service has also become a self-service system and a foolproof mechanism for rent-seeking, the stress being on kimbalam (illegal gratification) rather than sambalam (salary), to use Tamil terminology.

Centralisation can take the form of intervention in procurement contracts, discretionary distribution of scarce resources (land, public funds, primary schools, colleges, universities, etc.) and formulation of policies from above imposed on those whom schemes are intended to benefit, as well as the imposition of rigid guidelines which the “street-level bureaucracy” is expected to follow in letter and spirit. The damage resulting from such a system can be long-term, often resulting in serious misallocation of resources, with concomitant effects on economic development. Drawing on my three decades of experience in the civil services in India, I have identified six major consequences of centralized decision-making:

  • Corruption: Lord Acton rightly observed “…absolute power corrupts absolutely”. In the Indian context, we can safely say that absolute centralization corrupts absolutely. Primary education has been one major casualty; ministers deciding where and when schools are to be run, and by whom, have spawned a multi-million rupee black market in school education. The same pattern has been emulated in the case of higher education, with even more profitable results. Influential politicians and their backers run huge education empires today, often of extremely dubious quality. Maternal and child nutrition is another area where the Supreme Court Commissioners have documented a number of instances of state governments sidestepping the Supreme Court guidelines to award food supply contracts to monopoly contractors, ignoring local self-help groups. Recent actions of the central and most state governments indicate a tendency to favour individual contractors over local groups in food supply, ostensibly on the grounds of improved nutrition, although the evidence of years of centralized monopoly supply strongly indicate otherwise (as verified personally by yours truly at anganwadis (day care centres) in rural Maharashtra). It can always be argued that no corruption has been specifically established but then Caesar’s wife must be above suspicion: the antecedents of these contractors and their political connections leave ample room for suspicion.
  • Faulty policy design: Decisions in Delhi often do not work in the gallis (streets). The examples of three major policy initiatives of the previous government which continue under the present government show how top down policy making can stymie the best of intentions. Take the Mahatma Gandhi National Rural Employment Guarantee programme (MGNREGA). Designed to provide 100 days of employment to each member of the rural population who seeks work, the scheme drew on earlier examples such as the Employment Guarantee Scheme (EGS) of Maharashtra, which was intended to provide on-demand work at times when there were no work opportunities in agriculture. The problem with the MGNREGA lies in its design. Unlike the EGS, the MGNREGA is implemented across all districts in a state regardless of whether the prevailing economic conditions warrant such a wage programme. Common sense would dictate that there would be few takers for such a programme in a district like Kolhapur in Maharashtra with its extensive irrigation facilities and well developed agriculture and ancillary activities. It takes me back to 1989 when a precursor central programme, the National Rural Employment Programme (NREP), was implemented across all districts of Maharashtra. We found it almost impossible to get labour for this programme in a district like Parbhani in Maharashtra, where rural employment was abundantly available in the irrigated agricultural areas. In such a scenario, the local bureaucracy ends up subcontracting the entire programme to local contractors, who then use machinery to carry out the work, defeating the very purpose of the programme. Food security and education are again two areas where the ambitious universal thrust of the programmes does not take into account the glaring deficiencies in the public distribution and education systems in most states. Nor does it appear that the budgetary provisions the Government of India is making and that state governments are likely to make will enable universalisation of these two programmes.
  • Inefficiency: In my days as an IAS probationer, it was drilled into us that, as District Magistrates, we should assume a proactive role in firmly tackling violence between or directed against communities. The recent judicial commission report on the Muzaffarnagar violence of 2013 has faulted the district administration and the local police for inaction in preventing and subsequently containing violence during the riots. My surmise would be that the District Magistrate and the Superintendent of Police were looking over their shoulders for directions from their higher-ups on how to deal with elements that obviously had powerful political backing, instead of moving swiftly to nip the trouble in the bud through preventive arrests and a show of force. Centralisation in times of crises deters prompt, effective action. Yet another example comes to mind from a sector I am familiar with. The Directorate General of Hydrocarbons (DGH) was set up to regulate petroleum exploration and production activities in India. Over the years, a paranoid mindset in government agencies and the “intelligentsia” has led the DGH to refer every investment decision involving private operators to the Petroleum Ministry for approval. Contractual timelines for approval of proposals were blithely ignored while the mandarins in government wrestled with the decision process. That golden mantra of centralisation, referral to a committee, ensured that natural gas prices took years to be finalised. The final solution has satisfied neither the companies nor the command economy socialists in the intelligentsia, while the chimera of market-determined gas pricing recedes further into the future.
  • Demotivated street bureaucracy: Centralized programmes lay down rigid guidelines with almost no scope for exercise of innovation by those actually responsible for ground-level implementation of these programmes. Accompanying this is the tendency to distrust the lower bureaucracy, doubt their commitment and make scapegoats of them for faulty policy design. Complex and arduous reporting requirements tie up field staff in paperwork, not giving them time to attend to their clientele. It is no wonder then that there appears to be little enthusiasm for meaningful programme implementation with a specific focus on outcomes. The sense of a larger purpose in their professional life and of engaging in a noble mission is never inculcated in grass root workers. We observe this in the large majority of teachers and health and nutrition workers. No encouragement is given to primary level workers to use their initiative to resolve local problems, nor are small amounts of money made available to them to meet their basic infrastructure requirements or to experiment with ideas that can contribute to the success of the programme.
  • Disempowered communities and individuals: Programmes handed down from above almost never draw on the problem solving abilities of local communities. It is evident in the very designation of the recipient of the scheme as a “beneficiary”, effectively ruling out her participation in the design and implementation of the scheme meant for her. An overburdened, often disinterested bureaucracy is largely concerned with delivering the inputs and completing its targets, with no emphasis on either the processes of implementation or the desired outcomes.
  • Damage to democracy: The process of centralized decision making is, in the final instance, detrimental to the development of an aware, active citizenry that can contribute to the democratic process. As passive recipients, people are deprived of the capacity to participate in decisions that significantly impact their lives. When programmes fail to deliver the desired results, the consequent disenchantment often drives the disempowered into the clutches of demagogues who promise them the earth and capitalise on their fears to undermine the democratic framework of society.

Recent trends in the pattern of budgetary transfers from the central government to the states give more cause for concern. Devolving more untied funds to states will place more unbridled discretion for patronage in the hands of unscrupulous politicians and bureaucrats. State governments have, in any case, never been enthusiastic promoters of democratic decentralization. With little accountability for the manner in which public money is spent (or rather, misspent) and with little fear of being brought to book for their misdeeds, it looks as though, in the words of the Harvard University economist Lant Pritchett, India’s “flailing” governments will continue to flail away.

 

JAM for the Indian

The rule is, jam tomorrow and jam yesterday – but never jam today

(Lewis Carroll: Through the Looking Glass and What Alice Found There)

 

Alice was faced with a peculiar dilemma when offered jam by the White Queen; she could never have it today, but only tomorrow or yesterday. You guessed her problem: when tomorrow came, it would be today, so, as per the White Queen’s edict, she could never have her jam “today” or any other day, for that matter. The aam aurat/aadmi in India are in danger of being caught in a similar trap involving JAM, unless a lot of thought is given to how to operationalise JAM, popularise it, enable it to gain wide acceptance and surmount the innumerable obstacles posed by those who are better off (and don’t need JAM) but nevertheless are haunted by imaginary fears. I refer, of course, to the path breaking initiative of the Government of India to marry technology and finance to improve the living standards of millions of Indians. JAM has three components — the Jan Dhan Yojana (J), aimed at financial inclusion for the population as a whole, Aadhar (A), the issue of biometric identification cards to all Indians and the Mobile (M), the instrument that can be found in the hands of about 700 million Indians today. J, the first corner of this trinity, will reach banking and other financial services to millions who are currently unserved or underserved by existing banking systems. This will obviate the need for often understaffed/unstaffed “brick and mortar” bank branches. The recently licensed payment banks, with their focus on technology, are better placed to service remote populations with the skilful use of mobile technology, M, the second part of the trinity. The triangle is completed by Aadhar, A, the individual unique identification number that ensures that financial services and benefits flow to the person for whom they are earmarked.

The three essential conditions to be fulfilled if JAM is to operate smoothly are: (a) access of every Indian to banking channels where her money can be parked; (b) ease and efficiency of transactions; and (c) secure, accurate identification of the account holder to check diversion of benefits. An inadequate understanding of these requirements in transferring government benefits to intended beneficiaries has bedeviled implementation of schemes involving newly created bank accounts and has provided fodder to those Luddites who see red at the very mention of the word “cash transfers”. For example, the Government of Puducherry rushed through a scheme to overcome supply side constraints in the form of a dysfunctional public distribution system by transferring money directly to individual bank accounts. This ill-conceived measure ran into three issues which hastened its early demise: (a) inconvenient access to banks meant that people had to incur the double cost of visiting banks to draw cash and then going to the ration shop to purchase rice; (b) arbitrary deductions by the bank of apparently outstanding dues denied the beneficiaries access to the full amount of the cash transfer; (c) the money could be used to purchase anything, which meant women, children and the old might not get rice were the amount to be spent by the men of the family on items like alcohol. Hasty moves to pay MNREGA wages through existing inefficient banking channels have also come a cropper.

“Cash transfers” is a term that has been widely misunderstood and, I suspect, often deliberately misinterpreted to serve partisan ideological ends. For a start, we need to be clear about unconditional versus conditional cash transfers. In the former, no specific behaviour is sought from the recipient in exchange for availing of the cash transfer benefit, such as, for example, availing of the services of a public health facility or educational institution or fulfilling specific conditions like registering for antenatal care. This is in contrast to conditional cash transfers where availing of a specific, generally public, service provision entitles the beneficiary to the cash transfer. One problem with conditional cash transfers is the failure to provide satisfactory public services: for instance, if there is no doctor or nurse at a primary health facility, the failure to register for antenatal care would deprive the beneficiary of the cash transfer conditional on antenatal care registration. Going in blindly for unconditional cash transfers in such cases is fraught with its own dangers, like the apprehension in Puducherry that the male household head would spend the cash on liquor, thereby denying his vulnerable family members access to sorely needed nutrition, health or education benefits.

It is here that the government needs to use its imagination in devising a workable, effective solution covering schemes in different sectors. Unconditional and conditional cash transfers should be linked to a mobile wallet created for each beneficiary/consumer. This mobile wallet will be linked to the bank account and Aadhar number of the individual consumer. Cash transfers (whether unconditional or conditional) under different heads — health, food, education — will flow into the individual’s mobile wallet. Choice should be given to the consumer to access the service from a public or private provider, to reduce the inefficiencies of state/private monopolies/oligopolies. Goods/service providers will be paid through the mobile wallet for goods/services delivered, using point of sale machines that identify the customer through Aadhar identification procedures.

There is also the important issue of identifying the eligibility of the beneficiary for specific types of assistance. The government has scrapped the Below Poverty Line (BPL) lists. These suffered from two infirmities: first, the lists often left out the poorest and most marginalised sections of society and secondly, they were not dynamic, in that there was no provision for updation as families exited or newly entered the ranks of the poor. The 2011 Socio Economic and Caste Census (SECC) has attempted to use household data (based on an intensive nationwide survey conducted in rural and urban areas) to identify households which could be defined as suffering from deprivations of different degrees, using income and assets as criteria. While this is better than the old BPL classification, the SECC also has some grey areas which could affect the identification of those households genuinely in need of various social protection programmes. The authenticity of the data gathered during the survey can be open to question. There is also the issue of, over time, including households that, because of various factors, move afresh into the deprived category. Most importantly, there is no basis to ascertain income earnings, especially in case of households that are not covered by the Income Tax Department records and which, as in the case of agricultural households, are not liable to pay income tax. The possibility of families subdividing themselves to avail of benefits cannot be ruled out: one is reminded of the efforts made by sections of the agricultural elite, in the two decades after land reforms were introduced in the 1950s, to show land ownership in the name of servants and even animals to avoid parting with agricultural land.

One possible method of checking misuse of benefits would be to insist on bank accounts being linked to the Permanent Account Number (PAN) cards issued by the Income Tax Department and to the Aadhar identity. Over time, as this writer has often advocated, this should be accompanied by a move to a cashless economy. Currency notes of over Rs. 50 denomination should be withdrawn from circulation and mobile wallets should become the norm for cashless transactions. Moreover, transactions of a monetary value of over, say, Rs. 500, should be mandatorily through a cashless system. This would provide, through the income tax network, full details of the receipts and expenditures of every household, automatically thereby excluding from the ambit of government benefits those who are not entitled to them. If there is doubt about the feasibility of a country moving to a largely cashless economy, we need see no further than the example of Sweden. Cash represents just 2% of Sweden’s economy and only 20% of consumer payments are made in cash in Sweden as compared to 75% in the rest of the world (this figure would be well over 90% in India). Nor does the oft-parroted argument about the illiteracy of India’s citizens hold water: one just has to see how Indian men and women have taken to mobile phones to realise that lack of education is no hindrance to the enthusiastic adoption of “liberating technology”.

However, this would be possible only when there is a broad consensus on the applicability of Aadhar for all types of transactions. Sections of the intelligentsia have voiced apprehensions about the misuse of private data of individuals, despite the fact that the Aadhar card has the same information as the identity card issued by the Election Commission of India, except for the additional incorporation of biometric information. These groups have been actively agitating in the country’s highest judicial forum against the widespread adoption of this technology. Forgotten is the harsh fact that for a person deprived of so many economic and social rights, a hypothetical loss of so-called “privacy” is hardly the most important consideration. Forgive the atrocious pun, but without JAM, India’s poor and disadvantaged run the risk of being denied their bread and butter.

 

 

 

Companies and CSR – the Indian experiment

Corporate Social Responsibility (CSR) has been a favourite topic of discourse in the public domain over the past decade or so. With instances coming to light in recent years where actions of companies have impinged on the environment and the lives of local communities and with a far more discerning and voluble public, companies, and more so, governments, are aiming for responsible policies that, while promoting commercial interests, also take into account the sensitivities of the populations that will be affected, directly or indirectly, by these policies. The Government of India spelt out these obligations as far back as 2011 when it issued National Voluntary Guidelines (NVGs) listing out the social, environmental and economic responsibilities of businesses in India. The NVGs were, however, advisory rather than mandatory. It was only with the new Companies Act, 2013 (“Companies Act”) that Corporate Social Responsibility (CSR) spending was formally made a statutory obligation for companies incorporated under the Companies Act.  The objective was that companies deriving commercial benefit from their business operations should, as good corporate citizens, give back something to communities.

Section 135 of the Companies Act has laid down the procedure for companies to develop a CSR policy. However, the only specific issue mentioned in this section (that has a financial implication for the company) is the obligation for companies exceeding a threshold limit of net worth, turnover or net profit to spend, in a financial year, at least two percent of the average net profits of the preceding three financial years on any of the activities listed in Schedule VII of the Companies Act. These range from eradication of extreme hunger and poverty to promotion of education and gender equality, reducing child mortality, ensuring environmental sustainability and social business projects. As mentioned in the Report of the High Level Committee (“HLC Report”) appointed by the Government of India to suggest measures to improve monitoring of implementation of CSR policies, it is for the first time in the world that a provision for CSR spending has been made part of a statute. The HLC Report “…is convinced that the main thrust and spirit of the law is not to monitor but to generate conducive environment for enabling the corporates to conduct themselves in a socially responsible manner, while contributing towards human development goals of the country.” The first few years would necessarily be a learning experience for all stakeholders, including the government. It may, therefore, be instructive to focus on some of the key areas of implementation to see how this unusual piece of legislation could work out in the coming years.

It is quite clear that the intention of the CSR legislation was not to supplement public resources for social and human development; government could as well have taxed the companies to raise additional resources for this purpose, as has recently been done with the 0.5% enhancement in service tax rates to meet the costs of the Swachh Bharat campaign. Too often, non-governmental organisations (NGOs), particularly the larger ones based overseas, tend to wrongly visualise their roles as substituting the efforts of government. They tend to invest significantly in manpower and other resources in projects they take up on a pilot basis in certain parts of the country. The major drawback in such efforts is the failure to integrate the project with the local, especially public, resources already on the ground in a specific social sector. The result is that excellent outcomes reported in a very localised area almost never attain either scalability or sustainability. They are not scalable because of a lack of buy-in from the public service delivery machinery and the failure to enthuse/convince governments to adopt similar approaches in other areas. With NGO resources being finite, the initiative cannot be sustained even in the initial success area, leave alone extend it to other areas. There are lessons in such previous initiatives which need to be drawn by corporates if they are not to squander their CSR resources on small local projects that do not survive the withdrawal of the initial sponsor. It may make more sense for companies, especially larger ones, to link up their CSR spending with activities that complement ongoing programmes of the government. This view finds support from the HLC Report recommendation that companies with annual CSR spends of over Rs. 5 crores should undertake programme based sustainable CSR activities, with some measurable outcomes, while companies below this limit can go in for project-based activities. In fact, companies should, where resources permit, link their CSR activities to ongoing development programmes of the government. This would benefit such government programmes in two ways: (a) pilot initiatives could be started in selected areas, with the lessons learnt from such pilots being used to improve public programme implementation; and (b) governments could benefit from the innovative ideas and new concepts that corporate involvement brings to social ventures. This has been the rationale for at least one such multi-stakeholder partnership in the state of Maharashtra a few years back, the Bhavishya Alliance. This Alliance, comprising leading corporates, the Government of Maharashtra and NGOs/community based organisations, focused on reducing under-6 child malnutrition in Maharashtra state between 2006 and 2011.

Although it is rather early to start analysing the implications of specific provisions relating to CSR spending in the Companies Act and Companies (CSR Policy) Rules, 2014 (“CSR Rules”), certain issues may perplex companies and bedevil smooth implementation of CSR activities, unless greater clarity is forthcoming in the coming days and months on interpretation of some of the provisions:

  • Section 135 requires companies to give preference in CSR spending to the local areas where their operations are based. While this does not necessarily circumscribe company discretion to extend CSR activities to geographical areas not necessarily contiguous to their operational areas, it can give rise to interpretation conflicts. The HLC Report talks of companies with over Rs. 5 crores annual CSR expenditure being allowed to go in for programme-based activities. A number of such activities may not always be feasible in the immediate vicinity of company operational areas. Also, companies (especially family-owned ones) may wish to spend their CSR funds in the areas from where the founder came (Gujarat, Rajasthan, etc.) though there are no company operations in these areas. Most importantly, this may limit CSR spending in areas sorely in need of such human capital investments (in education, health, nutrition, etc.), such as remote tribal areas. In fact, there is need for governments to specifically encourage CSR investments in the most backward regions of the country, which often receive far less than their due share of budgetary resources.
  • There is a specific provision in the CSR Rules that CSR activities should not include those pursued in the normal course of business. Schedule VII of the Companies Act, which lists the eligible CSR activities, has been expanded three times already since the Act was notified in February 2014. It is well-nigh impossible to fully anticipate the nature of activities that qualify for CSR spending. Development priorities and needs can vary across time and geographies; hence, the HLC Report recommends an omnibus clause which covers all activities that serve a public purpose and enhance public welfare. Alternatively, the Companies Act should be amended to provide for specification of such activities in the CSR Rules, so that the Department of Corporate Affairs can amend the Rules as and when necessary.
  • In its present form, the Companies Act does not prescribe any penalty for non-compliance with the provisions of Section 135. It provides for what in regulatory parlance is termed “comply or explain”. The annual report of the Board of Directors of a company simply has to explain why the required amount could not be spent. Of course, in this age of social media, a multi-billion rupee company that trotted out silly reasons for its inability to spend on CSR activities would face public scorn, not to mention the adverse impact on its social image and the loss of goodwill. And yet, there could be valid reasons, like major business downturns, for a company’s failure to meet its CSR expenditure obligations. Rightly, then, the Companies Act has refrained from penalising non-compliance in spite of the mandatory nature of Section 135. However, Sections 450 and 451 of the Companies Act prescribe punishments ranging from fines to imprisonment for contraventions of provisions of the Companies Act for which no penalty or punishment is provided elsewhere in the Companies Act. In the absence of a specific clarification that these punitive sections do not apply to actions under Section 135, it is not impossible to visualise some overzealous bureaucrat bringing the might of the state to bear on infractions by companies under this section.

In the final analysis, the CSR legislation, despite its mandatory tone, is more self-regulatory rather than punitive, requiring a mature approach from both companies and governments. Both parties need to see how they can collaborate in using company resources to achieve the greatest public good. Companies need to shed their earlier approach of deeming that they have met their social obligations if they contribute to a schoolroom or a balwadi. Rather, the emphasis should be on CSR investments that contribute to ongoing improvements in the social and economic status of communities for which the CSR expenditure is intended. Companies should also interact on a regular basis with government departments and agencies to jointly examine how they can contribute to building managerial capabilities of the public service delivery machinery and introducing innovations in ongoing government programmes to ensure better outcomes. On their part, governments (especially state and local governments) should proactively assess and list programmes and activities where government efforts will be positively boosted by private support. The objective should be to develop a menu of activities which can be posed to various private sector partners for participation along with the government in improving standards of life. The Upanishadic exhortation “Vasudhaiva Kutumbakam” (the whole world is one family) has special relevance in the context of these efforts to improve the lot of one’s brothers and sisters.