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Subsidies for the rich or subsidies for the poor?

2012-01-19T15:22:00.001+05:30

Taxes account for over 84% of the combined revenue of the Union and State governments. How does India compare with other countries as far as tax revenues are concerned? What is the tax base of direct taxes? What percentage of their profits do companies actually pay in taxes? These questions are examined in the context of the anticipated large fiscal deficit by the Union government in 2011-12 and the plans to cut down on food, fuel and fertilizer subsidies in this InfoChange India piece.

Unraveling India's oil subsidies

2011-12-04T18:53:00.001+05:30

India

Together carried this piece with thetitle 'Oil subsidy is allgas'. It is reproduced below with pointers to sources for all the data usedand references to claims made.

The government periodically puts out data on the quantum of‘under-recoveries’ by the public sector refiners and distributors of petroleumproducts – Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum(HPCL) – on the sale of diesel, kerosene, and LPG. The exercise is calculatedto prepare public opinion to accept higher prices. Mainstream media oftenuncritically reports the ‘under-recoveries’ as the 'loss' (seethis ET report, for example) suffered by these oil marketing companies(OMC) or as the ‘subsidy’ that must be provided by the government to make upthe loss. Such an interpretation, though natural, turns out to be quite off themark.

'Under-recovery' is not the loss

The government measures ‘under-recovery’ as the loss an OMC wouldmake if it imported a petroleum product, say diesel, from the internationalmarket and after paying ocean freight, import charges and customs duty andincurring inland transport and marketing costs, sold the product to a dealer atthe government specified price. (Governmentnote explaining under-recovery calculation)

It is a notional loss, for it is unrelated to the actual processby which oil companies make diesel available in the Indian market - by refiningimported and domestic crude in Indian refineries. It is also an exaggeratedloss.( The use of the 'under-recovery' concept to determine petroleum priceshas been challenged recentlyin the Kerala High Court)

Price differentials in the international market between a refinedproduct and crude oil reflect the product specific demand-supply equationrather than the inherent cost of producing the product. Shortage of refiningcapacity for a particular product – real or artificially created – pushes thedifferential up.

International price differentials over crude ($/bbl)
	2010-11	2009-10
Petrol	7-8	7-9
Diesel	14-15	7-9
Jet-kero	14-15	8-9

The table above (compiled by taking Singapore & Europe prices as listed in Page 21 of theReliance annual report for 2010-11) shows the price differentialsfor petroleum products between 2009-10 and 2010-11. In 2009-10, petrol, diesel,and jet-kero (used to benchmark kerosene in

India

) all carried similar price differentials. The next yearsaw a near doubling of the differentials for diesel and jet-kero reflecting thepressure on the refining capacity for these products.

[This differential has gone upeven further this year. For the 2nd fortnight of Nov 2011, the average price ofIndia's crude oil basket was $108.80/bbl. During this period,the reference price of Diesel was $130.24/bbl and that of Jet-kero $127.63.(All data from the Petroleum Pricing and Analysis Cell (PPAC) of the thepetroleum ministry.) The price differentials for Diesel andJet-kero were greater than $21 and $19 respectively. Why have the 'diesel cracks been strong' (in the language of the refiners) ? Demand staying over refining capacity in China is cited as a reason.]

India

has adequate refining capacity to meet thedemand on each product. In any case, there is no reason why Indian public sector refineries should be making higher margins on diesel (or kerosene) because of the shortage of refining capacity in China. In linking the cost of diesel or kerosene in the Indianmarket to the international price, the government’s ‘under-recovery’calculation assumes a fat refining margin for these products.‘Under-recoveries’ do not represent losses, just as the assumed refiningmargins do not represent costs.

If ‘under-recovery’ is not the loss of the OMC’s, how much arethey actually loosing and what is the extent of the ‘subsidy’ that thegovernment has to extend to them? A look at last years (2010-11) consolidatedresults of the three companies provides some surprises. All three showedprofits, paid income tax, and declared dividends. Government provided supportto these companies under two heads – a fixed amount for each liter of Keroseneand cylinder of LPG sold, and a discretionary grant announced quarterly. Theaggregate amount is presented in the table (Data is from the published financial results of the companies) as subsidy.

Excise and Subsidy 2010-11 (Rs crores)
	IOC	BPCL	HPCL	Total
Excise	30861	12394	9743	52998
Subsidy	24282	10048	9727	44056

Each of the three oil companies paid more excise to the governmentthan it received as subsidy. In effect, the government returned a portion ofthe taxes it collected on petroleum products from the OMC’s. ‘Subsidy’considered in this light, appears to be a tax concession by another name, notvery different from the ‘fiscal stimulus’ the government extends to anindustrial sector when it is in trouble.

The OMC’s showed a large loss in the first half of 2011-12 andthis tells its own story. We will return to this a little later.

Who benefits from Indian crude?

Leaving refining costs and taxes aside, the price of petroleumproducts is determined by the price of crude oil. Government’s economists wouldhave us believe that this is completely outside its control.

The fact is that a significant quantity of crude oil is producedin

India

, sufficient to meet one third of thecrude oil requirements of the public sector oil refiners for products for theIndian market. The public sector producers – ONGC, GAIL, and Oil

India

– account for nearly 75% of this oil,while the rest comes from Reliance, Cairn and other private producers. (Monthly production statistics put out by the Petroleum ministry) Thelocally produced crude could be priced to moderate petroleum product prices forthe Indian consumer. Alternatively, revenues derived from local productioncould be used for this purpose. The government’s economic philosophy howeverdictates otherwise.

Private oil producers get rights to oil fields after signingproduction-sharing contracts with the government. These contracts mandateselling oil to Indian refiners at no less than the prevailing internationalprices. The contracts are structured such that government’s share of productionwill increase if the producers get a higher price for the oil. While providingthe government with another source of revenue, these contracts, by lockingIndian oil produce to international prices, ensure that the Indian public doesnot enjoy the benefits of local production.

The government treats the public sector oil producers somewhatdifferently, based on historical imperatives. They must sell their oil at a‘discount’ to international prices to the public sector refiners. The‘discount’, however, is not tied to the rise in international prices or thewindfall profits made when this happens; it is fixed every quarter, at thegovernment’s discretion.

The 2011-12 first half results of the OMC’s provide insights intohow the government uses its discretion on ‘subsidies’ and ‘discounts’.

The oil companies together showed second quarter (Q2) losses ofabout 14000 crores, on the backs of first quarter (Q1) losses of about 9000crores (Data from the quarterly published results). The government delayed announcing the Q2 ‘subsidy’, which, had it beentimely, would have allowed the OMC’s to show a small profit for the quarterinstead of a large loss. The Q1 ‘subsidy’ announcement was not followed up withcash, forcing the OMC’s to borrow from banks and pay high interest tofinance crude oil imports. The public sector oil producers provided sharplylower ‘discounts’ to the OMC’s on crude oil price in Q2 compared to Q1 andshowed sharply higher profits. One is left with the strong suspicion thatthese moves were orchestrated to make a strong case for increasing retailpetroleum prices as well as to make government’s planned disinvestment in ONGCand OIL more attractive.

Taxing the aamadmi

The central government has several revenue streams from petroleumproducts collected at different stages of processing. At the crude oilstage, it collects royalty, a share of the production (from private producers),and excise on oil produced and customs duty on the oil imported. At therefining stage, it collects excise on the refined products such as diesel andpetrol. Oil producers, refiners and marketers also contribute to the centralexchequer by way of taxes on their profits, dividends and tax on the dividends.State governments collect royalty on crude oil and sales tax on petroleumproducts. Sales tax rates range from 18% - 25% on diesel and 19% - 33% onpetrol with a few exceptions.

Last year, the central government’s income from the public sectoroil and gas producers, refiners and marketers alone was in excess of Rs100,000 crores, eclipsing the ‘subsidy’ it provided. State governments were notfar behind, collecting over Rs 80,000 crores. (Estimates are based on figures for ONGC, MRPL, OIL, IOC, HPCL, NRL, and BPCL obtained from their annual reports)

Taxes on petroleum products addto the cost of all goods and services and reflect in their prices. Far fromsubsidizing the public, governments raised a substantial part of their revenue from the aamadmi by taxing petroleum.

Thermal power clusters in the making

2011-10-11T17:51:00.000+05:30

The geographic distribution of the new thermal power generation capacity under development is highly uneven showing clustering in certain districts and regions of the coal producing heartland (See table below, reproduced from the Economic & Political Weekly)

The governments at the center and in the states have forsaken the local communities - who will bear the

adverse consequences of the large concentration of thermal plants - to favor the power producers.

The thermal power clusters are detailed in the EPW piece "New thermal power clusters" that appeared in the October 1-7, 2011 issue. The article may be downloaded here

National Manufacturing Policy

2011-08-09T19:38:00.003+05:30

A Hundred Million More Jobs in Manufacturing by 2025 is the clever advertisement for the government's soon to be unveiled National Manufacturing Policy. The jobs are to be created by rapidly growing the share of manufacturing in the GDP from the current 16 per cent to 25 per cent by 2025. The government's seriousness in pushing the new policy is evident from its involvement of senior executives of Tata Steel, Vedanta Aluminum, Maruti Suzuki and other major maufacturers in putting together the plans to implement it.

The situation on the ground, however, is quite in contrast to the ambitious plans. The share of manufacturing in GDP has remained almost flat over the last decade, sharply differing with the historical pattern seen in countries transitioning from being agrarian to industrial societies. The total employment in manufacturing, inferred from the results of the National Sample Survey 66th round (NSS-66) conducted in 2009-2010, is just short of 53 million. Eighty percent of this employment is in 'unorganised' manufacturing (units using electricity that employ less than 10 workers, as well as units not using electricity that employ less than 20 workers). Organised manufacture employs fewer than 11 million workers.

On top of these poor numbers, the employment in India's manufacturing sector is actually showing a declining trend, despite the high GDP growth rate of the recent past. Employment growth in the period 2005-2010 has been entirely in services and in the construction industry, while an estimated 3.6 million jobs have been lost to manufacturing, almost all of them in rural India (inferred from an NSS-66 report of June 2011). It would be a safe assumption that this loss has been entirely in unorganised manufacturing. Read the full India Together piece here

Thermal Electricity: Power hubs and hot spots

2011-06-26T14:53:00.003+05:30

Several states – Chattisgarh, Orissa and Andhra Pradesh among them - are building thermal power capacity far in excess of their foreseeable needs. Chattisgarh, for instance, is developing 21000 MW of thermal power, more than four times the generation capacity that it uses today.

This is however not the complete picture. Chattisgarh has signed dozens of memoranda of understanding (MOU) with companies to generate more than 50,000 MW of power. Most of these companies have joined the pipeline of projects working towards getting environmental clearance from the MoEF. The states profligacy in signing MOU’s is in line with its long stated policy of becoming a “power hub”, of using its large coal deposits to competitive advantage and “exporting” power to other states. Orissa, with similar ambitions, has signed MOU’s with 30 private companies for generating 38000 MW of power, over and above the power generated in state and public sector plants. Some of these projects are in the construction phase, the rest in the pipeline. Andhra Pradesh, too, wants to be a “power hub”, using imported coal at coastal power plants.

In these “power hubs” of the future, the projects (under construction and in the pipeline) are concentrated within a few compact geographical regions. The table below shows some of these ‘thermal hot spots’.

Thermal Hot Spots	District, State	Thermal Power Generation Capacity (MW)			Number of new plants
Thermal Hot Spots	District, State	In Operation	Being built	In the pipeline	Number of new plants
Coast around Krishnapatnam port	Nellore, AP	0	12260	8460	10
Samal reservoir and downstream on Brahmani river	Angul, OR	4420	2250	11710	15
Samal reservoir and downstream on Brahmani river	Dhenkanal, OR	0	5420	4820	15
Hirakud reservoir and upstream on Mahanadi	Jharsuguda, OR	1620	4400	2660	42
	Raigarh, CG	1300	6360	13040
	Janjgir-Champa, CG	0	8400	22460

Private producers, given the freedom, will invariably pick the locations for thermal plants suited to produce electricity at the lowest cost. The stretch of the Brahmani river in Orissa near Talcher and the stretch of the Mahanadi river just upstream of the Hirakud reservoir are extremely popular and the reasons are not too far to seek. Coalfields are located nearby, the water from the rivers and reservoirs can be accessed for meeting the large cooling water requirements of the thermal plants, and the areas are well connected by National Highways and railways.

The complete piece may be accessed at India Together

The demographic masculinization of India

2011-04-25T12:32:00.000+05:30

Census 2011 - the bad news

Census 2011 finds that for every 1000 males, there are only 940 females in India. India compares unfavorably in the sex ratio even with its neighbors – Bangladesh (978), Pakistan (943) and Sri Lanka (1034). China with 926 women for every 1000 men is the major exception being worse off than India.

This is however not the worst of the news in the census. The child sex ratio – the number of females to every 1000 males in the age group 0-6 years - at 914, is sharply lower than the sex ratio in the overall population. What is most shocking is that the child sex ratio continues to follow the decreasing trend established over four decades ago.

At normal biological levels, the sex ratio at birth should be close to 952 and this is seen to be the case even in many Asian countries - Japan, Thailand, Indonesia and Sri Lanka for instance. The normal child sex ratio should be equal to or higher than the sex ratio at birth. The extent to which the child sex ratio in India falls below the figure of 952 represents the numbers of the ‘missing’ girl children.

The worst offenders

The tribal belt states, and the eastern, north-eastern and southern states have far better sex ratios than the states of the north, west & central India. The worst offenders are Haryana, Punjab and the National Capital Region.

Region	States	Child Sex Ratio
North-East	Arunachal, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam	934-971
South	Kerala, Tamil Nadu, Andhra Pradesh, Karnataka	943-959
Tribal Belt & East	Chattisgarh, Orissa, Jharkhand, Bihar, Bengal	933-964
North & Central	Punjab, Haryana, NCR-Delhi	830-866
	Uttar Pradesh, Madhya Pradesh	899-912
West	Rajasthan, Gujarat, Maharashtra	883-886

In Haryana, male children exceeded female children by over 22% in 2001 (this has decreased marginally to 20% in 2011); and in certain districts like Kurukshetra and Ambala, it was closer to 30%. Read the complete India Together piece here.

An excellent discussions of the problem may be found in this reference: ‘The Sex Transition Ratio in Asia’, Christophe Z. Guilmoto - available online here

Direct cash transfers - a recipe for food insecurity

2011-04-04T12:25:00.000+05:30

Mainstream media voices are unanimous in calling upon the government to withdraw from public distribution of food grains and fuel. "Direct cash transfers" is the new catch phrase. "Money where the mouth is" screams an op-ed. Instead of distributing food and fuel at regulated prices, the government should hand out cash to BPL families to enable them to make purchases at market prices.

The government's economic advisors differ only in the details. Kaushik Basu, Chief Economic adviser to the Government of India, argues for distributing food coupons to BPL families that can be exchanged for food at private retailers. He sees the need for supporting the current retail outlets - the "fair price shops" - only in poor and remote areas that may not be attractive to private traders (Economic and Political Weekly, 29 January 2011). On the other hand, a government committee headed by Montek Singh Ahluwalia is reported to be recommending a more cautious approach. Cash transfers are to be made to BPL families having UID-linked smart cards which will be valid only at the network of Fair Price Shops. This will keep the PDS intact in the interim.

However, the end game in all these approaches is the same, with the government getting out of distribution of food grains.

These "reforms" do not address the problem of exclusion of millions of poor from access to the PDS. Will they benefit at least the existing consumers of the PDS service?

For a discussion, see this India Together piece.

Public servants, corruption, and legal immunity

2011-02-03T18:15:00.000+05:30

Plagued by numerous corruption scandals, the Government has constituted a group of ministers to look at administrative and legislative measures to tackle corruption, including a review of laws that provide immunity to public servants. Interestingly, the last two occasions that the Government moved to modify the anti-corruption laws was to strengthen the legal immunity offered to public servants.

The provision of legal immunities to public servants goes back to the formative years of the present Indian state structure. The Code of Criminal Procedure (CrPC) adopted in the early 1860’s required previous sanction of the government to prosecute judges and important public servants (those “not removable from office without the sanction of the government”) for offences committed in the discharge of their official duties. By 1898, the Code also contained a provision for special courts whereby the government could take control of all aspects of the trial by specifying the court, the judge, the manner of trial and the offences to be tried for.

Providing immunity to its officials was a matter of great importance for the colonial state. The Government of India Act, 1935, prohibited the legislature from even considering changes to the immunity provisions in the CrPC without the prior sanction of the Governor General. Further, sanctions for prosecution of immunized officials was taken away from lower officials and vested with the topmost officials of the colonial government - none other than the Governor General (for Federal officials) and Governor (for State officials). The legal immunities offered to public servants were understandable from the perspective that the colonial state wanted its functionaries to be accountable only to itself. The needs of maintaining control over a vast and hostile continent dictated this.

Immunity provisions for public servants have continued in the law after the advent of a republican constitution – more specifically, in sec. 197 of the CrPC as well as in the Prevention of Corruption Act (PCA), 1947 and its later replacement, PCA, 1988. According to details provided by CBI, as of December 2010, it was waiting for permission to prosecute 320 officers. The CBI does not reveal how many requests have been denied over the years.

Fear of vexatious prosecution?

The justifications for immunity provisions have evolved since independence. The Law Commission articulated arguments in support of the immunity provisions in these words in 1969:

“The ultimate justification for the protection conferred by sec. 197 is the public interest in seeing that official acts do not lead to needless or vexatious prosecutions. It should be left to the government to determine from that point of view the question of the expediency of prosecuting any public servant”

On its recommendations, the CrPC was amended in 1973 to extend the immunity provisions to retired public servants as well. More recently, in late 2008, the UPA Government tried to amend the PCA, 1988 to provide immunity provisions to retired public servants in line with similar provisions in the CrPC providing as a justification the need to provide a “safeguard to a public servant from vexatious prosecution”. The amendments to the PCA were passed in the Lok Sabha but could not clear the 14^th Rajya Sabha in its dying days.

Fear of harassment of state functionaries by ‘private persons harbouring a grievance’ by starting prosecution variously described as ‘needless’, ‘false’, ‘frivolous’, ‘speculative’, ‘vexatious’ or ‘mala fide’ came to be the accepted justification for the previous sanction immunity provisions. However, this fear could not have been based on the actual experience of public servants as the immunity provisions had been there ever since the criminal codes were put in place in the 1860’s. If prosecution that could be characterized as above was indeed prevalent and used to harass ordinary citizens, would it not have been in order to take additional steps to discourage vexatious prosecution intended to harass not just public servants, but also the ordinary citizens?

These questions, it seems, were never opened up for public debate.

Greater protection for ‘decision makers’

Governments were not satisfied with even this level discretionary power. Corruption involving ‘decision making level’ government officials and members of the political executive usually in collusion with private companies (‘grand corruption’ in the words of the recent Central Vigilance Commission Draft National Anti-Corruption Strategy document) was an extremely sensitive matter and governments wanted discretionary powers to disallow even investigation of such cases.

A Congress government in 1986 took the first step to introduce another layer of protection for ‘decision making level officers’ – officers of level Joint Secretary and above - through an executive order given to the Central Bureau of Investigation (CBI) known as the ‘Single Directive’. This infamous directive prohibited the CBI from even investigating such officers without prior permission from the government. The state governments also followed the Centres lead by requiring their investigating agencies to obtain permission prior to prosecuting senior officers.

Over a decade later, having witnessed the total frustration of investigations into ‘grand corruption’ scandals associated with the Narasimha Rao government, the Supreme Court quashed the ‘single directive’ observing that

“(t)he law does not classify offenders differently for treatment there under, including investigation of offences and prosecution for offences, according to their status in life. Every person accused of committing the same offence is to be dealt with in the same manner in accordance with law, which is equal in its application to everyone”

Strongly feeling the necessity to intervene in what were administrative issues, the Supreme Court directed the Government to make the CBI and the Enforcement Directorate more autonomous and isolated from “extraneous influences” and even suggested ways to make that happen. A weak coalition government attempted to reintroduce the ‘single directive’ provision through an ordinance in 1998, but the Supreme Court negated this attempt.

It was left to a BJP lead NDA government to bring back the substance of the ‘single directive’, now in the form of law, through the CVC Act of 2003.

The saga of the ‘single directive’ is not over. A petition challenging the constitutional validity of a law requiring government approval for investigation of only senior officials is currently pending with the Supreme Court. The Congress lead UPA Government has opposed the petition.

Benefits of discretionary power

Clearly, major political parties across the spectrum have supported strengthening of immunity provisions at different times. The reasons for this support are not far to seek.

The immunity provisions put absolute and unaccountable discretionary powers in the hands of the political executive. Political parties in government routinely use this power in a partisan manner to secure a political advantage over parties who are their adversary. Discretionary power in the hands of the political executive also helps develop the nexus between the political executive and the corrupt or pliant bureaucrat, a necessary condition for “grand corruption”.

The reasons for getting rid or at least limiting the legal immunities provided to public servants will be clear. The Draft of the National Anti-Corruption Strategy also recommends this. However, having enjoyed the ‘benefits’ of these discretionary powers for decades, it is extremely unlikely that the major political parties will vote to give up these powers voluntarily.

This piece was published in the February 2011 issues of One India One People

Deregulating the coast

2011-02-03T10:31:00.000+05:30

The new coastal regulation (Coastal Regulation Zone Notification, 2011) reads as a compendium of the myriad exceptions to the few rules - of industries and projects that may in general or based on a case-by-case review, use the coast despite the environmental damage they will cause. It represents a further move away from managing the coastal natural resources based on principles to one based on discretion and exigency. For a critique, see this India Together piece.

The Law of contempt and freedom of speech

2010-12-17T19:46:00.004+05:30

The Law relating to contempt of courts is once again in focus. Supreme Court lawyer Prashant Bhushan is facing contempt proceedings in the Supreme Court for making allegations of corruption against some Supreme Court Judges in an interview in Sept. 2009. Tarun Tejpal, Managing Editor of Tehelka is also facing charges for publishing this interview. In a recent development, former Union Law Minister Shanti Bhushan has also attempted to implead himself in the case by repeating the same allegations.

The Law in question, The Contempt of Courts Act, 1971 (Act of 1971) defines ‘contempt’, allows for a summary trial, and prescribes the maximum punishment, imprisonment up to six months together with a fine. Disobeying court orders, interfering with judicial proceedings, or obstructing the administration of justice is contempt of court. So also is scandalizing or lowering the authority of the court.

Courts need the power to see that their directives are implemented, that the functioning of the court is not disrupted, that parties in a trial are not threatened, that witnesses or court officials are not offered inducements and so on; in short, the power to ensure that the judicial process works. This is an objective of the law of contempt. However, Dr Rajeev Dhavan, an eminent lawyer who has written extensively on contempt and the press explains, “(t)he overall purpose of the law of contempt is not just to make the judicial process work, but to protect, sustain and enhance the majesty of courts and the justice system.” The contempt of ‘scandalizing the court’, it seems, has much to do with this purpose.

Read the complete piece at India Together

Mining vs Communities

2010-10-16T20:24:00.005+05:30

The opposition to mines and mining across the mineral rich belt of India is not a blind opposition to modernization, or an opportunistic posturing for getting a better deal. It is based on the dreadful experience of people with past projects. People left without land or livelihood, broken job promises, polluted earth, air, and water – all of this is public knowledge in the mineral belt. It is this knowledge that is behind the resolve of the communities against letting in mining into their homelands.
Take Korba district of Chhattisgarh for example. Half the mineral related revenues of mineral rich Chattisgarh come from this tribal majority (51%) district. Over 11% of India’s coal is mined here, most of it by a subsidiary of CIL. Taking advantage of the proximity to the mines, there are four thermal power plants located here, generating 3650 MW of electricity. Korba gives a lot to the country.
What do the people of Korba get in return?

The Chhattisgarh Human Development Report (2005) records that less than 50% of the households in Korba district had electricity. 20% of the villages in the district complained of respiratory diseases caused by fly ash from the thermal power plants. Huge open fly ash ponds dot the Korba landscape. The wind blows ash particles from NTPC’s large pond, which is located at a height, into villages and fields lower down. The impact of mining ranges from coal dust from coal handling plants covering the agricultural fields and affecting the yield adversely, to pollution of surface water leading to negative effects on the health of people and agriculture as well as degradation of forests. Korba holds a mirror to the ugly face of mining in India. A Google satellite image of Korba shows up the fly ash ponds as white patches on the landscape.

View Larger Map

Take another example. NDMC, a public sector company, is

India

’s largest iron ore producer. Over 80% of its production is from the Bailadila hills (named so, as the hills resemble the hump of an ox) in Dantewada district of Chhattisgarh. 78% of the population of Dantewada is tribal. Here in Chhattisgarh’s tribal heartland, nature in all its forms - trees, waterfalls, and streams - is revered and venerated. The forests help sustain livelihoods as agriculture, where practical, is limited to a single crop. The mining has resulted in the destruction of the forests, and people report that one third of the forest area of Dantewada is degraded. The groundwater level has fallen. The Bailadila hills show up as an ugly brown gash amidst the green jungles in satellite images.

View Larger Map
For people who strongly depend on forest produce, natural streams, and ground water for their livelihood, the devastating impact on their quality of life can only be imagined.
If the new draft mining regulation is aimed at changing the attitude of communities towards mining, it may be missing the point entirely.Read the complete story here.

Indian public finance: How is revenue shared between the union & the states?

2010-09-09T13:23:00.003+05:30

The States of India account for about 55 per cent of the combined expenditure of the Union and the States, but collect only one-third of the combined tax revenues and 40% of the combined non-tax revenues. The gap in revenue and expenditure of the states is made up by transfers

from the union. The table shows the states 'own revenue' sources as a % of total revenue receipts ( own revenue + transfers from the union). The position of the states has actually deteriorated from the 1950's increasing their dependence on the center. Own revenues were >86% of total revenue then. At present, own revenues are around 58% of total revenues.
The asymmetry between the states and the union in revenue resources and revenue expenditure - termed the 'vertical imbalance' - has repercussions beyond finance.
For more, see this India Together piece.

Commonwealth Games Village

2010-07-31T13:28:00.000+05:30

CWG workers village, Delhi University, July 2010

What lies behind the amazing export performance of SEZ's?

2010-07-14T10:25:00.000+05:30

This piece from Business Standard makes for interesting reading. I quote some parts:

"There is something odd about India’s export numbers.....Exports from 111 such (Special Economic) zones totalled $49 billion in 2009-10, up 123 per cent from the $22 billion earned in the previous year.....What is odd, therefore, is not the export figure for the zones but that for the rest of the country. Total exports last year, at $176 billion, were about 5 per cent lower than in the previous year. If you take out the SEZ numbers for the two years, then non-SEZ exports fell from $163 billion to $127 billion — a sharp drop of 22 per cent....Indeed, non-SEZ exports in 2009-10 were at the same level as three years earlier ($129 billion in 2006-07). The law on SEZs was passed in 2005, and it took a while for the government to start clearing the zones after the controversy over land acquisition and related issues. It was only after this that the zones could start functioning. So, it is safe to assume that hardly any of the exports that took place in 2006-07 would have been from the SEZs."

The writer goes on to pose the question if the growth of exports from SEZ's is purely on account of diversion of exports from non-SEZ areas to SEZ's to enjoy the tax concessions.

Why is India not able to train doctors and nurses in the numbers that it needs?

2010-05-23T11:47:00.022+05:30

This table shows World Health Organization (WHO) figures for the density of doctors & specialists, and the density of trained nurses & midwives, as well as certain mother and child health indicators for a few countries. India has the worst health indicators as well as the lowest numbers of doctors + nurses for every 10,000 people in comparison with the other countries listed here. The density of doctors, at 6 per 10,000 (not including ayurvedic and homeopathic practitioners), is expectedly far below the numbers for developed countries. The density of nurses in comparison with the developed countries is even more glaring.

Even the comparison with Brazil, China, Russia, and South Africa is not flattering. What comes as a surprise is that South Africa is marginally better than India in health indicators and has a better health worker density. While the health indicators depend on various factors including nutrition and hygiene, it is in some measure also linked to the access to health workers.

The Rural Depths

The above figures do not reveal the real picture though as they do not account for the urban rural divide.

Rural healthcare provided by the government has a three-tier structure – Sub Centre, Primary Heath Centre (PHC) and the Community Health Centre (CHC). The PHC is the first place available for the rural poor to see a doctor. Each PHC by design must have at least one doctor and one nurse and currently serves, on average, a population of 31,000. For specialist consultation, people are expected to go to the CHC. Each existing CHC must have 4 specialists – a surgeon, gynecologist, physician and pediatrician – supported by 7 nurses and currently serves, on average, a population of 1.7 lakhs. It is probably safe to assume that medical care in rural areas is almost entirely provided by the Government. With this assumption, the physician density works out to < 0.6 and density of trained nurses/midwifes to < 0.5 in rural areas.

The shortfall of medical personel to man the existing CHC's and PHC's is reported by the Government as follows: Doctors short by 3537; Specialists short by 11033; Nurses short by 18021.

The shortfall of specialists must be seen in the context of the numbers of specialists trained every year in India - currently about 12,000 across all specializations. It will take many years to fill specialist positions in rural health centers even if all newly trained specialists moved there for a period.

How is Government policy towards medical education changing to cope with this shortage? These issues are examined in this India Together piece

Links:

Govt. press briefing on plans to rlx norms (Mar. 2008) - Livemint Report
Knowledge Commission: report of working group on medical education
Faculty transferred for a day - TOI Report on Karnataka Govt. Colleges
WHO Global Health Observatory
MOHFW: Bulletin on Rural Health Statistics

Commonwealth Games Village

2010-05-08T19:44:00.000+05:30

Apex auditor CAG today said the Delhi Development Authority incurred losses of over Rs 150 crore in its dealings with Emaar MGF Construction, the developer of residences at the Commonwealth Games Village (Hindustan Times Report)

In my article written in Sept. 2008 I had dwelt on this "public-private-partnership".

Coastal regulation zones

2010-04-21T09:15:00.001+05:30

"The Government .... has allowed the 2008 draft Coastal Management Zone(CMZ) draft notification to lapse, as of July 2009. What happens to the Maharashtra government’s long-standing plan of relocating slum-dwellers to the saltpans so as to make available some of the world’s most expensive land in the heart of Mumbai for development? Has the Government taken back the CMZ draft merely because it was a shoddy job that did not please “even private developers”? Time will tell"

These are the concluding words of my historical review of coastal regulations carried in the April issue of Infochange Agenda ("On the waterfront"). The piece can be accessed here.

ORF seminar on land acqusition issues related to "Mega Projects"

2010-01-24T13:09:00.005+05:30

Observer Research Foundation (ORF) held a seminar on “Mega Project Development: Issues in Land Acquisition” on 20th Jan 2010.

The participants included top serving and retired bureaucrats, senior officers from the corporate sector and a few representatives from academia and civil society. I was invited to speak to represent a civil society viewpoint. ORF will no doubt bring out the seminar proceedings in time as per their usual practice. The following are the notes I used for my speech.

Development sans the people

Large scale development needs land and other natural resources such as water and minerals; in the current model of development, it has no use for the people living on the land. Boundaries have to be erected around the area of the development as quickly as possible after evicting the original occupants so that the work can proceed. The original occupants are not part of the development nor will they benefit from it except perhaps in some incidental way; they therefore have no stake in the project.

On the other hand, living outside but in close proximity to the development, those expelled have to deal with the “externalities” of the project – the competition for natural resources like water, the pollution of the environment – that industrial activity in the project area inevitably brings along. Is is any wonder that there is strong opposition to acqusition for "mega projects"?

I will give a few examples. An earlier speaker alluded to land acquisition for MRPL. Ground water in the vicinity of MRPL is polluted. The MSEZ comming up in the same area will compete for Netravati’s water with the farmers of the area. In the Uttaranchal run of the river hydroelectric projects, tunnel boring using explosives has caused damage to crops and ground water sources in nearby villages.

An authoritarian colonial legal framework is conveniently used to force the people to part with their land. The framework is focused on obtaining possession of land from its current owners and has no interest in what happens to those who are thus dispossessed and displaced. The process brings years of uncertainity and fear into the lives of the affected.

In order to justify forcible acquisition, the colonial framers of the law used the notion of “public purpose” or “larger public good” for which a forcible acquisition could be resorted to. Justice was seen to be achieved if compensation at “market value” was provided to the land (property) owners as would happen in a free transaction between a buyer and a seller. The compensation fixed by government for land has always been a disputed issue and is responsible for a large part of the civil litigation clogging the courts.

The main preoccupation of changes since independence has been to enlarge the scope of “public purpose” so that the government has an unfettered hand and its decision to acquire land cannot be set aside by the courts on the grounds of purpose or end use. Today – after the experience of over 60 years of land acquisition by the Indian state for varied uses - the garb of public purpose has lost all legitimacy in the eyes of the people. (I have discussed this in great detail in this piece) Land acquisition by the state is seen as a land grab orchestrated by and on behalf of corporate entities with private profit as the motive.

Rehabilitation and resettlement (R&R) – the language of benevolence

Large scale land acquisition covering many villages and their lands has caused large scale human disasters persistently highlighted by the Narmada Bachao Andolan and other organizations.

Instead of addressing the loss of various rights (not just that of land ownership and tenancy) of all the affected people (not just land owners and tenants) consequent on land acquisition in the Land Acquisition Law, the government has been pushing a “resettlement and rehabilitation” policy over the years. This policy has taken a new avatar – an R&R bill that is waiting clearance from parliament to become law.

Acquiring land for a 'public purpose', with its attendant displacement and denial of livelihood, is claimed as a right of the state. But the R&R bill does not accept that it is the state's duty to resettle and rehabilitate all the affected citizens so that they are at least able to maintain, if not improve, their current standard of living.

Rehabilitation is presented as an act of benevolence of the state, a measure to mitigate the suffering of the affected citizens to the extent permitted by the external circumstances and subject to various conditions. In fact, involuntary displacement caused by the planned exercise of the coercive powers of the state is equated with displacement caused by chance natural calamity, both deserving of the same response from the state. The R&R bill remains little more than a statement of policy. And such a policy has been extent for many years without making a real difference. (For a detailed critique of the R&R bill, see this piece

Land acquisition by the state – even with R&R thrown in – does not change the basic outlook projected by large development projects and the basic perception of the affected people that the state is acting as a land agent on behalf of corporate India.

People have fiercely opposed in the past and continue to oppose acquisition for large projects. If land is acquired overcoming the opposition, creating islands of development surrounded by displaced people will only keep alive a permanent hostility between those sheltered inside barbed wire fences and those outside and push the dispossessed to seek justice through other means.

Needed - a framework for planned (re)development of the countryside

Large scale development must also take up the aspirations of the people of the area. There has to be integrated planning – plans for locating industry, but also for the residential, commercial, environmental, educational and agricultural needs of the population and the environment. Land use has to be planned for the hinterland, just as it is being done for the metros’ today.

The plans for a project must be seen as a re-development of their area by the people residing there – in that case they will be willing to bear the dislocations and trauma associated with the change. This involves taking the people of the affected area into confidence about the plans, getting their approval through direct democracy initiatives; most importantly, it means that the planning of a project should also include planning for the townships for the affected people, compensation for their loss of income and a stake in the project in lieu of their land.

The state must take responsibility for such planning and changes of land use. It’s task must be to ensure that the affected people are not shortchanged and also see the fruits of development…The true cost of a project would include the cost of redevelopment for the people of the area and itself will act as a brake on unnecessary “mega projects” and projects in heavily populated areas.

Food price inflation - Why is the Government helpless?

2010-01-21T10:59:00.004+05:30

Food prices have become a major talking point for the media and the opposition parties have also just woken up to defend the aam aadmi. The Government has unveiled some short term measures to curb prices and it remains to be seen if these will be effective. The problem however is not short term in nature. A timeline of food prices of common food items shows that the rapid food price inflation dates back 2 years and even more in the case of certain items.

Several questions arise. Why have prices risen? Are farmers benefiting from the rise? And why is the government so helpless in curbing the rise?

This article in India Together attempts to find answers to these questions.

Comming a month later this article in the Hindu Business Line by C P Chandrasekhar and Jayati Ghosh of JNU carries a similar analysis.

Bundelkhand - Drought and environmental destruction

2009-11-30T15:08:00.005+05:30

This is the second part of a record of voices and images from Bundelkhand gathered while travelling in the company of a group of students and teachers of Delhi University. The first part appeared here.

Traveling through Bundelkhand, this question repeatedly comes up in conversation. Is drought a recent phenomenon or is this something that has always been a part of this region? In an attempt to get the perspective of local intellectuals and social activists, we seize on an opportunity to attend a conference on the drought organized by Dr Bharatendu Prakash at Chhatarpur. Dr Prakash is an unconventional scientist, having quit academic research at IIT Kanpur back in 1974 and embraced rural development activities through the medium of non governmental organizations. In the past, he has co-authored a study on the water resources of Bundelkhand sponsored by the Government of India. Today, he is a leading activist of the Organic Farming Association of India and is also working with the MP Council of Science and Technology on a detailed village by village survey of water resources in MP’s Bundelkhand region.

Dr Bharatendu Prakash ,Vikram Sarabhai fellow at the MP Council of Science & Technology has been studying the water resources of Bundelkhand from many years.

The conference is being attended by activists from different districts of Bundelkhand – both from UP and MP and is being held at the Gandhi Bhavan in Chhatarpur. The speakers concur on the causes of the current crisis and their view goes something like this. Historically, Bundelkhand has been periodically subjected to drought. This being the case, the people have evolved over time elaborate mechanisms to cope with the drought. What has changed in recent years is that the traditional coping mechanisms have fallen apart. The problem is not so much the shortfall in rain – officially called meteorological drought – rather it is the reduced ability of the people to cope with such a shortfall.

What were these coping mechanisms?
Dr Prakash explains that Bundelkhand even in a normal monsoon gets almost all its rain in about 40 days and even on those days in a matter of a few hours. The problem to be addressed is how to prevent the water from running off rapidly down rocky slopes into streams and rivers leading to the Yamuna – the river that drains the region. The solutions evolved over a 1000 years have been to construct innumerable rain water harvesting structures taking into account the lay of the land, designed to capture the runoff in surface ponds and recharge underground sources. Water harvesting structures – ponds in every village and town and at other strategic locations - had been crafted in the region as early as 800-900 AD by the Chandela kings and reinforced by subsequent rulers – the Bundela’s and the Peshwa’s. But in addition to conserving the rainwater, Bundeli’s evolved hardy crop varieties that required less water and cattle breeds that could withstand the rigors of drought. Food and livelihood sources were diversified to provide fallbacks in case of failure of one source.

At the conference today, speaker after speaker rues the official apathy and neglect of the age old water harvesting structures resulting in reduced water availability for cattle and irrigation and in dug wells going dry. On the one hand, recharging the underground reservoirs has been neglected while on other, the focus on bore wells with large pumping capacity has lead to increased exploitation of ground water in an unsustainable manner leading to a drop in the water table. Speakers point to the steadily reducing forest cover and large scale mining activities that have further impacted the water table.

A detailed exposition of the negative fallout of a Government program for land consolidation carried out under advice of the World Bank is made by some affected farmers. The program called ‘Chackbandi’ entails forcible consolidation of farmers’ holdings. Land is divided into 3 categories depending on the soil quality. Farmers may possess some quantity of each type of land and typically use each type of land for a specific purpose – for growing grain, for pulses and oilseeds or as pasture land for cattle. Under the Chackbandi program in UP, the individual farm boundaries are redrawn and farmers are given a single parcel of land after allowance for its type and the type and extent of lands they earlier possessed. The new boundaries are determined by Government officials and in the re-division, trees have been cut, common ponds and their watersheds encroached upon and traditional bunds that retain water in the fields destroyed. The forced redrawing of boundaries has also played havoc with the individual farmers’ livelihood security – with farmers not having pastures for their cattle or being able to grow all the food items to meet their own needs. Thus a measure, supposedly to help the farmer, turns out in fact to have a profound negative effect on agriculture as it has been done without taking into account the specific conditions of Bundelkhand.

Along with the overexploitation of groundwater, we learn that there has been a shift towards commercial agriculture in Bundelkhand – producing crops for the market based on intensive water use as prevalent in the irrigated northern states. These are the sort of changes – pushed by Government or market driven - that have made it more difficult for people to cope with drought.

In our travels around Bundelkhand, we repeatedly come across examples of the changes that Dr Bharatendu Prakash and other NGO’s have told us about.

Environmental destruction in high gear

At Charkhari, we come across a set of 11 interconnected ponds, with stone embankments and gates to let water move from one pond to another, an intricately designed water storage infrastructure. The ponds are going to seed from neglect.

A pond at Charkhari, UP. Part of a system of 11 interconnected ponds, the rain water storage structures built nearly a 1000 years ago by the Chandela rulers are decaying due to lack of maintenance.

This neglect of old water storage structures we witness again and again in different parts of Bundelkhand. Every village or small town we visit has one or more large ponds usually dating hundreds of years. The water bodies are now filthy with sewage allowed to flow in, garbage dumped on the banks, silt accumulation and weeds.

The river Betwa flows skirting Jalalpur village in Hamirpur district. Across the river, standing on the old ghat, we can see sand mining is in full swing. A long line of waiting trucks can be seen parked some distance from the huge sand excavators.

Sand mining from the banks of the river Betwa near Jalalpur village, Hamirpur District. An unending line of trucks can be seen in the background waiting for their turn.

The mining is being done close to the water channel and social activist fear will cause a fall in the water table in riparian areas and other damage to the river ecosystem.

Sipping tea early one morning near Harpalpur station, we are surprised by the traffic of fully loaded trucks that pass by every few minutes. Chaturvedi ji, an activist from the NGO Sumitra Samajik Kalyan Sansthan informs us that these are trucks laden with unpolished granite from Bundelkhand’s quarries headed for Delhi.

We travel to Kabrai in Mahoba District of UP, a mining center. The stone crushing operations have turned vast areas into barren wasteland; the air is heavy with dust particles and the midday sun is dulled by the smog. Mines are leased out by the Government and nominally there is a local lease holder. But there are larger ‘maliks’ behind the local leaseholder - the operations require capital - investment in cranes, crushers and other heavy equipment. There are reported to be about a 100 stone crushers just in and around Kabrai.

A stone crushing unit in Kabrai, Mahoba District, UP. Fields have been laid waste for miles around these units.

We stop at an open cast mine where what was formerly a hill has already been reduced into a deep pit. The rock is broken up using explosives. The mine has already reached the water table at its deepest point. An old tractor driver tells us that the mining will only stop only if it becomes so dangerous that workers refuse to work the mine. He has been working here for 18 years and earns Rs 2000/ per month. Worker gangs breaking the stone into smaller pieces or loading it into trucks are paid by the truck load. Women are also working along with men. The workers come from different areas of Bundelkhand and live in a settlement right next to the mines breathing the air heavy with dust at all times. There are no doctors or hospitals in the area. The miners have no safely equipment – not even helmets. The workers tell us that only very major injuries and death are compensated for. Accidents happen often. There are no announcements when blasting is done and flying debris is a common danger. A short while after we have taken the

A primitive open cast mine at Kabrai. The water seen at the deeper level is ground water. The roc walls are broken up using explosives, broken into smaller pieces by hand and brought up in tractor trailers.

photograph of this mine rocks land at the spot where we had stood a few moments earlier. Mining may be providing employment in these parts, but it is certainly employment under the most exploitative conditions.

Across Bundelkhand, we have seen the unbridled destruction of the environment. The effects of this have not been quantified by anyone, but the social activists we meet are convinced that these have contributed to the misery of the region.

The official thinking

An inter-ministerial central team lead by a Joint Secretary in the Agriculture Ministry went last year to study Bundelkhands problems and presented its ‘Report on drought mitigation strategy for Bundelkhand region of UP and MP’. The report agrees with many of the observations of the NGO’s in this terse language:

“Hybrids of Jowar, Bajra, Bt cotton, input intensive new varieties of pulses, oil seeds, public distribution system, neglect of tanks, dug-wells and installing of tube-wells have altered traditional coping systems and increased risks, distress and vulnerability to droughts.”

The preferred intervention of the government towards water resources has always been dams and canals. The report finds that these interventions have been performing poorly. “Out of 31 lift Irrigation schemes of Madhya Pradesh only eight functioned occasionally and overall utilization varied from 5 to 10% only. Only 50% utilization of canal irrigation in Madhya Pradesh is a major concern of improving management.”

The report recommends medium term measures such as “participatory integrated watershed management for in-situ conservation of the rainwater, recharging of about 2.8 lakh dug wells, renovation and repairs of Bundela, Chandela and Peshwa tanks, digging of farm ponds and open wells” and a substantial budget. But the ‘special package’ for Bundelkhand to carry out these measures remains on paper after more than a year.

In line with the dominant official thinking on water resources, the central report emphasizes that “development of unutilized water resources in MP, improving efficiency of the already developed canal irrigation system and Ken Betwa links are the long term investment portfolio for mitigating droughts”. “Development of unutilized water resources” essentially refers to dams and canals. And the Ken-Betwa link is the first in a series of planned projects for interlinking India’s rivers, purportedly to better harness their waters. According to the South Asia Network on Dams Rivers and People, an organization that carefully monitors river projects, the proposed Ken – Betwa link entails a 73m high dam on the Ken submerging dense forest and a link canal about 230 km long, transferring a portion of the Ken waters to the Betwa river, on the way passing through protected and reserve forests and crossing the Dhasan river, many minor streams, state highways and a railway line. The 2005 cost estimate for the project was Rs 4500 crores.

Local NGO’s such as Dr Bharatendu Prakash’s are bitterly opposed to this river linking project saying that this will be an unmitigated environmental disaster for Bundelkhand. A drought mitigation strategy or an environmental disaster – the question certainly needs to be debated thoroughly in public before anyone decides to spend Rs 10,000 crores public money on this ‘investment portfolio’.

27th Oct. 2009

Politicians and accountability

2009-11-23T17:17:00.001+05:30

Reports of politicians amassing wealth have become a daily affair. Ministerial position, it seems, affords unlimited possibilities for personal gain.

Why don’t the safeguards provided by the Constitution against misuse of powers by elected public servants work? The legislature, deriving its power from the peoples’ mandate, is in theory, supreme. It helps form the council of ministers from 15% of its members and exercises control over it. But in practice, it seems that it is the power of the party (or coalition) with the legislative majority that prevails over the legislature, aligning it with government in unqualified support.

So Government functions without oversight by legislature. Madhu Koda could award contracts for mining and A. Raja allot spectrum on the ‘first come first served’ basis at 2001 rates in 2008, without the legislators crying fowl. A PIL exposed the Koda affair while spectrum allocation policies are under the scanner only after the companies with licenses offloaded shares at a huge profit.

So how can the Indian public protect itself from the depredations of its politicians? For some systemic changes that may help, read my Economic Times article here

Bundelkhand - Failure of public services

2009-10-31T12:58:00.002+05:30

Three days spent visiting villages in Bundelkhand and interacting with the aam admi is enough to convince one that the plethora of government social security schemes - the NREGA, the PDS, mid meals for children, old age pension, special schemes for tribals, etc - are a complete failure and do not reach most of the intended beneficiaries, at least in this region.

In the Raikwar basti of village Adiyara, District Chhatarpur, MP. Job cards but no jobs.

The view of 'grassroots democracy', the panchayati raj, that emerges from conversations with villagers is also an eyeopener. This visit is reported here

Punekars exercise negative vote option

2009-10-14T18:16:00.000+05:30

The Hindu carried an interesting news item today titled Many Punekars use option of negative vote . What is intrigueing is that the Pune District Collector apparently took steps to popularise the option before the Assembly elections, and hence the response. My analysis on the significance of the negative vote can be found here

Sugar: The cycles of plenty and scarcity

2009-09-12T18:21:00.011+05:30

"Kashinath Chinkera (30) of Mangalgi village ended life by consuming pesticide on Saturday. He is survived by three children. He had reportedly availed himself of a loan of nearly Rs. 2.5 lakh.

Most of the 43 farmers who ended lives in the district this year had grown sugarcane. Their complaint was that their crop was not bought by sugar factories in the district. They had huge loans to repay and they had spent a lot of money on cultivation. Refusal or delay by factories meant their crop would dry up day by day."

---------- The Hindu reporting on farmers suicides in Bidar on May 28th 2007

The graphic below shows the retail price of sugar in Delhi - figures supplied by the Ministry of Civil Supplies. Your kirana store likely charges more.

The government describes the shortfall in sugar production as a "cyclical phenomenon" coupled with the effects of a bad monsoon. An analysis of the reasons behind the runaway inflation in sugar prices makes for different conclusions.

Sugar cane must stay in the field for 11 to 15 months to mature. The year refered to is the 'sugar season' and starts from October, the earliest month when crushing of the years sugar cane begins. Crushing lasts for a maximum of 6 months and the factories close their crushing operations by the end of May. Thus 2008-09 cane production refers to cane brought for crushing in the sugar season 2008 October to 2009 September. Cane acreage came down sharply in 2008-09 on the back of a smaller drop the previous year. Cane production came down by 20% while acreage had come down only by 12%. How much sugar was produced from the cane?
This question is answered by the next graphic. Sugar production fell by a sharp 43% in 2008-09 from the previous years level much higher than the 20% fall in cane production.

The reason, it turns out, is that more sugar cane - used for making gur and khandsari besides sugar -was converted to gur in the 2008-09 season than usual. Why did farmers prefer to see to small scale units manfacturing gur and khandsari rather than to the sugar mills?

The above graphic also shows imports (exports) of sugar. The consumption in India seems to be about 20-22 million tonnes. The years 2006-07 and 2007-08 were years of overproduction. The government promoted exports to get rid of the excess stocks even providing a subsidy to exporters as international prices in 2007 were lower than Indian prices.

India started importing sugar from early 2009. The international market has now gone into a tizzy knowing that India has to make huge imports to meet requirements for 2009-10. See the full analysis in this India Together article

This piece has been referenced in a paper on a 'Sustainable Sugarcane Initiative' here

Decline in Civil Litigation

2009-07-13T10:48:00.013+05:30

The CJI is concerned (see here) over the decline in civil litigation in India. Another article in the TOI some months back hinted at this decine in the District Courts of UP.

How does the litigation rate in India compare with western democracies? How much is the decline? Where - which states - is the decine happening? What is the average time taken to settle a civil case? What is the backlog of civil cases? Is there a relation between declining litigation and the backlog in the courts? If people are not comming to the courts, are they taking law into their own hands? Many questions arise.

I had come across some papers earlier by Prof Marc Galanter (see here) where he indicated to a) generally low rates of civil litigation in India and b) a possible long term decline in civil litigation starting from the 1930's. Is there new data that establishes the trend of falling litigation that has caused the CJI to comment?

I attempt some answers in this India Together piece based on the readily available data sources - the Supreme Court website and answers provided by the Law Ministry to questions in Parliament. The chart at the begining of this post is explained there.

Is data available over a longer term? I don't have an answer. This piece by Rajeev Dhavan 5 years ago talks about the non-availability of data and a bill proposed by Fali Nariman that would enable collection of data. What happened to this bill?

Inflation in India - Different measures, different conclusions

2009-07-05T17:27:00.010+05:30

The WPI continues to diverge from the consumer price indices. For a comprehensive discussion, see this article

Higher Education: Underbelly of privatization

2009-06-13T12:47:00.007+05:30

Privatisation of higher education is rapidly progressing in India. The Planning Commission reports that in the period 2002-2007, the share of private institutions in higher education increased from a third to over half of all enrolment. And this trend, by all accounts, will continue into the future. more..
This Nov. 2008 article has been listed as one of the sources used in an Ernst & Young paper presented at the FICCI higher education summit, 2008.

Bridge over the Neela Hauz

2009-06-08T14:55:00.014+05:30

Though I live only a few kms away, I first heard of the Neela Hauz only when this sign board was helpfully put up at one of the entrances to Sanjay Van - the remaining forested portion of the ridge bounded by JNU and other academic and research institutions, the Qutub institutional area and Mehrauli

This hauz - one of the many rainwater harvesting structures that dotted this area - is no longer blue, overridden as it is, with water hyacinth. Residents of Mehrauli remember diving and swimming it its waters, 30 years back. Some years back, there was apparently a plan to 'revive' this water body - but that seems to have been quietly shelved. The 2010 commonwealth games opened up the possibility of an "infrastructure" project - a bridge over the dying Neela Hauz. The construction is taking its toll of the hauz; the water body is not seen as an integral part of the development but more as an engineering obstacle to be bridged. The development is the highway - wide and straight and ready for speeding traffic between airport and the city center.

The irony is that even as the Government pushes rain water harvesting in cramped buildings through penalties and concessions, large existing rain water harvesting structures are being allowed to die. Development is always seen as building/constructing something new with a large budget in hand. But what about maintaining and improving what is existing? What about preserving and improving a forest with all its existing bio-diversity? Uninteresting perhaps to the bureaucrat when compared to a new "bio-diversity park"; but easier on the budget and a more sustainable approach if we are not going to be content with just a few museum peices.

Youth in action 4th June 2009

Inflation in India - is WPI a faithful measure?

2009-05-29T09:30:00.012+05:30

The media has been interpreting the Wholesale Price Index (WPI) numbers as heralding that inflation has been halted. But other indicators show a picture of inflation entirely different from that shown by the WPI. Far from reaching zero or negative levels, inflation as measured by the consumer price indices has been averaging around 10 per cent for industrial and agricultural workers over the last 6 months. Read article here

How to make money and prevent climate change in the process!

2009-05-27T10:44:00.008+05:30

An intriguing headline in the metro page of HT today caught my eye - "Climate change on priority list, civic body plans fund". The article quotes the Mayor Kanwar Sen: "Currently in the MCD budget, there are hardly any funds earmarked for dealing with climate change, an issue that needs due priority. We are planning to get a separate head for funds for this purpose". What is on Sen's mind? Environment friendly projects that earn carbon credits, it seems, and restoring Yamuna to its "original healthy state" with Korean help.

Games Village to be underwritten by public finances

2009-05-26T10:52:00.008+05:30

The "public - private partnership" defined for building the commonwealth games village has entered a new phase with the DDA forced to underwrite the cost of construction in order to get the facility completed in time (see this news item).The private builder - EMMAR MGF - could simply wring his hands and say that he did not have enough money.I had written about the partnership in Sept 2008 here

Climate change and Himalayan dams

2009-04-28T18:51:00.007+05:30

A new UN report on water resources carries alarming warnings about the impact of global warming on Himalayan rivers. Unmindful of the possible consequences, over 450 hydropower projects are being planned in the Himalayas. Read the full story..

The law on election expenses

2009-04-28T18:39:00.003+05:30

Originally, laws limiting election expenses were framed with the view that curbing election expenses was essential to keep the process fair. Over the years, the laws have been changed to allow unbridled expenses and neither the UPA nor the NDA wants to disturb this comfortable arrangement. Read On..

Negative voting and the law

2009-03-16T11:27:00.004+05:30

It is election summer, and the leaders of the major political parties are busy nominating candidates whose most important qualification will be the ability to take advantage of the local caste or community arithmetic in their respective constituencies. In these pre-election games, neither those who do the everyday work of parties nor those who vote them in and out of power have anything to do with selecting candidates. Naturally, then, one is led to ask - on Election Day, should the voter have the choice to reject all candidates - by selecting a 'None of the above' option on the electronic voting machines - if he finds them all unsuitable? Read On..

SEZ's - Failed Economic Policy

2009-01-22T20:21:00.003+05:30

The lack of economic activity in most SEZs leads to the suspicion that many were incapable of attracting economic production units in the first place. The rush to 'denotify' them only reinforces this view. SEZs: engine derailed?

The Global Economic Crisis and Indian Agriculture

2009-01-22T20:12:00.001+05:30

The current crisis has some striking similarities with the fallout in India of the Great Depression of 1929-1933. Indian farmers were pushed deep into debt, and the overall economy suffered. Patterns from the past

Book Review: Smoke and Mirrors - Pallavi Aiyar

2008-10-16T15:45:00.006+05:30

China holds a deep fascination for India's urban elite. This is the China of double digit growth and unending capital inflows, of shining new cities, six lane expressways and spanking clean airports. This is also what India's elite aspire for.

The inevitable comparison with China is ever present in the Indian media - why is our Gurgoan not like Pudong or why is India able to attract only a fraction of the investment that is flowing into China? So is the desire to match China in different spheres - in the splendour of the just staged Olympic Games, in the recent flawless demonstration of prowess in space technology.

While China's development story is common knowledge, what is less well understood is what it is that really makes China tick. From where does the government derive its legitimacy? What is the relationship between the citizens and the government? Are there stresses and strains in this relationship? How do the subjects view the changes being brought about in their lives? Is the development in China sustainable?Read full review..

Land acquisition - colonial times to the present

2008-09-26T11:44:00.004+05:30

This story traces the evolution of this phenomenon of eviction and land acquisition by the state under various pretexts starting with colonial India.

Land Acquisition from colonial times to the present

A report published by Oxford titled "INDIA INFRASTRUCTURE REPORT 2009 Land—A Critical Resource for Infrastructure" extensively reproduces parts of this article and can be seen here

The Commonwealth games village and the Yamuna riverbed

2008-09-25T11:49:00.005+05:30

In the name of housing Commonwealth Games participants for a mere 10 days, an exclusive gated community is being established on the Yamuna banks, in areas previously protected as green spaces in the heart of Delhi.

A run on the Yamuna Banks

Treehugger has reproduced the article here

Edible oil policy

2008-08-12T19:01:00.005+05:30

The edible oil policy that reportedly favoured Indian consumers at the cost of farmers has come back to bite the consumers with a vengeance. And with the US and Europe embracing biofuels, things could get much worse.

Edible oil on the boil

Mercury poisoning of HUL workers in Kodaikanal

2008-08-12T18:58:00.004+05:30

Down to Earth has not responded with either a yes or a no to my article "Corporate irresponsibility and Government indifference" after writing to say that it was under consideration.

Well, I must have my say, so here goes:

The shocking public revelation by Kodaikanal citizens that mercury contaminated waste from the Hindustan Lever Ltd. (HLL) thermometer factory was being dumped at a local scrap yard served as the trigger for Government and corporate action to close the factory in 2001. The factory had been relocated from the US 18 years earlier, with the Government permitting its location at the edge of the ecologically sensitive Pambar Shola, the watershed for the Pambarai River, as a ‘non-polluting’ entity.

Kodaikanal citizens had become aware of the extreme hazards posed by mercury to health and environment through the work of Greenpeace and the Palani Hills Conservation Council.
Up till then, even the workers in the factory had no understanding of the dangers of working with mercury; neither the company nor the state pollution control or labour authorities had thought it fit to educate them.

The discovery of mercury laden waste with a local scrap dealer, however, proved to be just the tip of the proverbial iceberg.

The report of the company-appointed environmental consultants, published in 2002, revealed severe contamination of the closed factory premises, with high levels of mercury in the soil (over 500 mg/kg in some samples). High mercury levels were detected even outside the factory, in soil in the path of runoff from the factory that merged with the Pambarai and in lichens in the path of air exhausted from contaminated areas of the factory.

Following the damning report, HLL agreed to carry out limited remediation of the site and the surrounding areas to bring down mercury contamination of the soil to 10 mg/kg. Environmental groups however felt that the company was not coming clean with its accounting of mercury and suspected that a much larger quantity of mercury was lost to the environment, or, disposed off along with waste glass to scrap dealers, than was acknowledged. Surprisingly, the pollution control agencies of the government did not press for a thorough independent investigation of mercury contamination of Kodaikanal or of the spread of mercury through waste sent for recycling to various parts of South India over the years.

Four years after the factory had closed down, a team of scientists belonging to Bhabha Atomic Research Centre and JNTU, Hyderabad, reported elevated mercury levels in the waters, sediment and fish of Kodai Lake, the central tourist attraction of Kodaikanal.

The increased awareness of mercury hazards impelled ex-workers of the factory to report a number of health problems they had been facing for years; their symptoms matched the known effects of exposure to mercury. Several of their children had birth defects and problems such as mental retardation, mutations and heart disorders. The turnover from the factory had been exceptionally high in all its history with workers citing health reasons for leaving. 10 ex-workers of average age 32 had reportedly succumbed to diseases of multiple organs including heart, lungs, kidney, brain & liver.

The environmental assessment of the factory site and surroundings showing severe mercury contamination, the unsafe practices in handling mercury reported by workers and evidenced in the casual disposal of mercury waste, and finally the testimony of the workers regarding their health problems, all pointed to moderate to severe exposure of workers to mercury.

HLL, however, refuted this. Immediately after closing the plant, it carried out an epidemiological survey of a section of workers, who had voluntarily responded to an advertisement. An occupational health study, based on the survey results and old factory health records, concluded that the workers had not been exposed to mercury above safe limits and that none of them were suffering from health problems that could be attributed to mercury exposure. A team of doctors of the Community Health Cell in Bangalore including specialists in occupational health who were first presented the study in late 2001, found it to be entirely unconvincing and undertaken in a hurry.

The state institutions – labour department, factory inspectorate and the pollution control board - did not consider it necessary to intervene on behalf of workers or to even organize an independent detailed study of their health. The burden of proving that they had been victims of mercury poisoning was left to the workers, unsuited as they were to the task with their limited means and the poor public health facilities they had to rely on.

The ex-workers have taken recourse to legal means, seeking compensation from Hindustan Lever for disabilities incurred by exposure to mercury and for lifelong medical assistance. The case is currently before the Madras High Court.

A Court appointed experts’ committee visited Kodaikanal in October, 2007 to determine if the health problems of the workers were due to mercury exposure. Five year old Michael Damien, suffering from a brain disorder, was presented before the committee, among others. One week later, Damien died. His mother Daisy had worked in the thermometer factory between 1996 and 1998.

A visit to the HLL ex-employees association office in Kodaikanal reveals row upon row of files, neatly stacked, containing the detailed health record of the workers and their children. Secretary of the association, Raja Mohammed, shows me Damien’s file recording his birth, death and the medical history of his short life. A small interruption from the street outside and he loses the thread of our conversation – Raja too suffers from memory loss, a known symptom of mercury exposure. Right across the road is the scrap yard that was found with mercury waste.

Coastal area regulation - the lae and practice

2008-08-12T18:47:00.004+05:30

Plans are on to develop low-cost housing on 2,167 hectares of saltpans in Mumbai that are presently under the control of the salt department, a wing of the central government.

At a recent meeting of a high-powered group of ministers, it was decided that “efforts of various central and state agencies be coordinated and urgent measures evolved for using these lands for rehabilitation of slumdwellers” (Financial Express, May 29, 2008). The land freed from the existing slums would be divided up for private real estate and public infrastructure projects.

One of the ‘urgent measures’ needed to make this possible is a change in the environment protection regulations governing coastal land use -- these regulations, as applied to Mumbai, prohibit development in all but 240 hectares of the saltpan lands in question.

The change is already underway. The Ministry of Environment and Forests (MoEF) made public a draft Coastal Management Zone notification in May 2008 that will replace the current coastal regulations with a far more permissive regime allowing changes in coastal land use such as that planned for Mumbai’s saltpans.Read the complete article here

Horse trading and the law

2008-08-12T18:43:00.006+05:30

There is wide-spread agreement that horse trading in the political arena is immoral and undesirable, and should be illegal. But what is the actual position of law on this? A look at the legal treatment of an incident from the past throws up some surprises.Read complete article

Case backlog and government litigation

2008-08-12T18:38:00.005+05:30

The individual pitted against the state

“At his own expense, he must challenge the vast panoply of state power, with all its resources in personnel, money and legal talent ….”

A clerk of the Central Public Works Department is fatally injured in a road accident by an Army vehicle used by the Chief of Army Staff in 1994. Rajwati, his wife, has to file a suit against Army Head Quarters and the Defence Ministry for compensation, which she is awarded 14 years later, in March 2008. more..

This article is cited as a reference in the globalintegrity.org report for 2009 while answering the question - "In practice, are judicial decisions enforced by the state?"

Whose land is 'wasteland'?

2008-08-12T18:31:00.004+05:30

Republican India has not broken with colonial law and policy even in the 21st century, continuing with the policy of considering as public land all land not assessed for revenue and taking over such land after declaring it ‘forest’ or ‘wasteland’ irrespective of the history of occupation and use.

Infochange Agenda article

The politics of land acquisition

2008-08-12T18:26:00.004+05:30

LAND in a single piece, capable of being fenced off so that it can be treated as a ‘foreign territory’, is the fundamental precondition of the ‘Special Economic Zone’. The SEZ policy (currently) calls for very large parcels of land, with a minimum area of 10 sq km and extending up to 50 sq km for the so called multi-product zones. It is to acquire such large tracts of land that private industry, of necessity, needs the help of the state. State governments, vying with one another to attract large business houses, are more than willing to oblige.

Coercive land acquisition by the state in recent times has generated strong opposition and extreme bitterness. In Nandigram, people have fought at great personal cost to retain their lands and homes. In Maharashtra, farmers have stalled (at least temporarily) land acquisition for the Maha-Mumbai and Navi Mumbai SEZs; in Orissa, villagers continue to offer unyielding resistance to the POSCO SEZ.

Sensing the widespread nature of the opposition and keen to move ahead with its SEZ policy, the government has proposed major amendments to the acquisition framework with the Land Acquisition (Amendment) Bill, 2007 and the companion Rehabilitation and Resettlement Bill, 2007 both tabled in Parliament this December. The government claims that the new laws ‘will go a long way in striking a balance between the need for land for development and other public purposes and protecting the interests of the persons whose lands are statutorily acquired. Read complete article - 'Of public purpose and private profit'

Forced displacement without rehabilitation

2008-08-12T18:19:00.005+05:30

Acquiring land for a 'public purpose' is claimed as a right by the state under its powers of eminent domain, but it accepts no duty to resettle and rehabilitate all the affected citizens. Instead, rehabilitation is presented as an act of benevolence Read complete article

This piece has been used extensively in a critique of the R&R bill by the NGO Equations
Also extensively quoted in Draft report of Committee on State Agrarian Relations and unfinished task of land reforms

"Criminal Tribes"

2008-08-12T18:12:00.004+05:30

I have been struggling to find a home for this baby since 25 Sept 2007. Sent the piece to several magazines without getting a reply. Each time, I edit the piece before sending it to a new address. It looks good to me. Finally a piece of good fortune. InfoChange India publishes this piece on 26th October

SEZ's and the land acquisition law

2008-08-12T17:59:00.003+05:30

My India Together article on this subject can be found here

Political parties - policies and programs?

2008-08-12T17:56:00.002+05:30

My first attempt to publish a piece (25th July 2007) is unceremoniously rejected by The Hindu in double quick time - I get a rejection mail within an hour of sending the writeup. Not sure why they did not like it - it was meant for the Sunday 'opinions' page. Anyway, here it is:

What Quality Indian Democracy?
Every school child is taught to take pride in India being ‘the world’s largest democracy’. What is commonly understood of our democracy is that it is a representational democracy, that is, citizens elect representatives who have the responsibility to act in the people’s interest. Representatives typically belong to Political Parties. Political Parties provide a basis for the electorate to exercise their choice by presenting a set of policies and programs that they commit to. The ‘choice’ offered to the citizen therefore is not only the personal characteristics of the candidate (his personality, caste, religion, connections, record of social service, etc) but most importantly the policies and programs that his party commits to. At least, that is how it is supposed to work.While the major political parties in India may commit to populist programs and sometimes even implement them when in power, it is at the level of policy debate that one sees a real vacuum. Our political parties shy away from discussion and debate on issues of public policy that have far reaching consequences for the country - either because they do not have a defined view, do not care to make public their views or are simply not bothered by these issues as they do not have a direct bearing on their ability to come to or stay in power. Instead, they do their best to fill the public mind space with sterile discussion. Witness the level of political discussion over the last month on candidates for the post of president and vice president, the energies spent by the nations leading politicians and the parties they represent crying hoarse in favour of or against some candidate. Now that the dust of the ‘battle’ has subsided, can someone explain how the choice of the president will make a difference to the woman or man on the street?What are some of the burning policy issues of the day on which there should be more discussion? If we open our morning paper or weekly magazine we can’t miss the issues starting at your face. Indian agriculture is in a deep crisis. Everyone knows about the farmers suicides, but what policies (of the past) have brought on this situation and what policies need to be set in place to prevent these in future? We would like to hear the Congress, the BJP and others spell out their positions on this. And the farmers suicides is just a portent of much worse things to come. Food grain production has reached a plateau over the last few years. How is India to be fed in 2020 when an estimated 400 million tons of food grains will be required which represents a 100% increase over current production levels? Again what policies do we need to ensure food security in the future? Yes, food security is not just an issue of the past as some would like to have it. And yes, we would like to hear our national political parties debate and come up with their positions.Leaving agriculture for the moment, let us look at one major problem common to all urban areas in India, even the most richly endowed metropolises – water supply and sanitation. How are the water needs of our cities to be met? We are just beginning to understand how precious water resources are. What do we need to do to safeguard our water resources? Can we continue to use water the same way in future as we have done in the past? Can our political parties state their positions and engage in a debate so that the Indian people become aware of the options?Today, public policy that needs to be widely debated is being left to the wisdom and judgement of a few bureaucrats to formulate. But for some committed members of civil society and the press who take the initiative to question and cross swords with the bureaucracy, there would be no ‘second opinion’. Much as we expect the quality of goods and services to improve, can we not expect a higher quality of informed opinion and debate from Indian political parties on issues that matter for India?