Yojana June 2014 KURUKSHETRA

June 2014 YOJANAVol 58Chief Editor : Rajesh K. Jha Joint Director (Production) : V.K. MeenaSenior Editors : Shyamala M. Iyer Cover Design : Gajanan P. DhopeSub Editor : Vatica Chandra E-mail (Editorial)  : [email protected] (Circulation)  : [email protected] Website : www.yojana.gov.in https://www.facebook.com/pages/Yojana-JournalLet noble thoughts come to us from all sides Rig Veda CONTENTSInvesting to Propel Growth in Indian Agriculture Special ArticleAshok Gulati, Surbhi Jain.........................................................................5 Understanding Rape Law Reform Pratiksha Baxi.........................................................................................38Dissecting Agricultural Performancesince Mid 1990s North east diaryRamesh Chand........................................................................................10 National Highways in Assam..................................................42Building State capacity in India Deconstructing Social ProtectionAjay Shah...............................................................................................17 Anurag Priyadarshee..............................................................................44Developing countries, Agriculture Agricultural Growth in India:and the World Trade Organization Performance and ProspectsJ P Singh.................................................................................................24 P K Joshi, Anjani Kumar........................................................................50ShodhYatra Indian Agriculture: Emerging IssuesChild Poet Innovates a Machine and Policy Perspectivesto Clean Rice without Hassle...............................................30 Srijit Mishra............................................................................................58Indian Agriculture – A Review of Best practicesPolicy and Performance Illuminating the dark-dense forests..............................62C S C Sekhar..........................................................................................32Our Representatives : Ahmedabad: Amita Maru, Bangalore: B.S. Meenakshi, Chennai: A. Elangovan, Guwahati: Anupoma Das, Hyderabad: Vijayakumar Vedagiri,Kolkata: Antara Ghosh, Mumbai: Abhishek Kumar, Thiruvananthapuram: R.K. Pillai.YOJANA seeks to carry the message of the Plan to all sections of the people and promote a more earnest discussion on problems of social and economic development. Althoughpublished by the Ministry of Information and Broadcasting, Yojana is not restricted to expressing the official point of view. Yojana is published in Assamese, Bengali, English,Gujarati, Hindi, Kannada, Malayalam, Marathi, Oriya, Punjabi, Tamil, Telugu and Urdu.EDITORIAL OFFICE : Yojana Bhavan, Sansad Marg, New Delhi-110001 Tel.: 23096738, 23042511.Business Manager (Hqs.) : Ph :24367260, 24365609, 24365610For new subscriptions, renewals, enquiries please contact : Business Manager (Circulation & Advt.), Publications Division, Min. of I&B, East Block-IV, Level-VII,R.K. Puram, New Delhi-110066, Tel.: 26100207;] Sales Emporia : Publications Division: *Soochna Bhavan, CGO Complex, Lodhi Road, New Delhi-110003 (Ph 24365610) *Hall No.196, Old Secretariat, Delhi 110054(Ph 23890205) * 701, B Wing, 7th Floor, Kendriya Sadan, Belapur, Navi Mumbai 400614(Ph 27570686)*8, Esplanade East, Kolkata-700069 (Ph 22488030) *’A’ Wing, Rajaji Bhawan, Basant Nagar, Chennai-600090 (Ph 24917673) *Press road, Near Govt. Press,Thiruvananthapuram-695001 (Ph 2330650) *Block No.4, 1st Floor, Gruhakalpa Complex, M G Road, Nampally, Hyderabad-500001 (Ph 24605383) *1st Floor, ‘F’ Wing,Kendriya Sadan, Koramangala, Bangalore-560034 (Ph 25537244) *Bihar State Co-operative Bank Building, Ashoka Rajpath, Patna-800004 (Ph 2683407) *Hall No 1, 2ndfloor, Kendriya Bhawan, Sector-H, Aliganj, Lucknow-226024(Ph 2225455) *Ambica Complex, 1st Floor, above UCO Bank, Paldi, Ahmedabad-380007 (Ph 26588669) *KKBRoad, New Colony, House No.7, Chenikuthi, Guwahati 781003 (Ph 2665090)SUBSCRIPTION : 1 year ` 100, 2 years ` 180, 3 years ` 250. For SAARC countries by Air Mail ` 530 yearly; for European and other countries ` 730 yearly.No. of Pages : 68 Disclaimer : l The views expressed in various articles are those of the authors’ and not necessarily of the government. l The views expressed in the articles are of the author and they don't represent the views of their organisation. l The readers are requested to verify the claims made in the advertisements regarding career guidance books/institutions. Yojana does not own responsibility regarding the contents of the advertisements. YOJANA June 2014 1

YE-35/20142 YOJANA June 2014

YOJANA Mazdoor, Kisan and MalikThe agricultural sector in India is a sight of struggle at many levels. On the theoretical plane, the debate about the role of agriculture in the economic development of the country, its relative importance vis a vis the industry and services sector, modes offinancing agricultural development, the changing nature of agrarian relations and associatedpolitical questions give rise to sharply polarised positions across the academic spectrum.At the same time, the practical problems like the relative backwardness and lack of basicamenities of health and education in rural areas, migration from agricultural activities tocities etc. also pose a challenge to policy makers and planners. There is no doubt that the agricultural sector is a critical factor in determining the welfareof the people in the country as a whole. After all, almost half of the total employment in theeconomy is generated in agricultural sector providing sustenance and livelihood to morethan 70 per cent of the people living in the rural area as per the Census 2011 figures. It isa noticeable fact that the share of agriculture in the GDP has shown a marked decline from 51.9 per cent in 1950-51to 13.7 per cent in 2012-13. Clearly, it leads to ‘asymmetry in income and employment’ which generates a skeweddistribution of income between agricultural and non-agricultural sectors and also between rural and urban areas.These trends require a close analysis to understand the forces at work in the agricultural sector and the dynamics ofchange therein to gain a foresight into the future of this sector and to formulate the policy roadmap. Indeed agriculture is a vital component of the strategy for the reduction of poverty since the growth originating inagriculture is known to be twice as effective in reducing poverty compared to the growth originating outside of theagriculture. But India’s record of growth in the agricultural sector leaves much scope for better performance. Thereis no doubt that the growth rate of agriculture has shown an upward trend from 2.15 per cent in the period 1951-52-1965-66 to 3.89 per cent for the period 2005-06 to 2011-12, yet it has not been able to keep pace with the growth rateof other sectors of the economy over the same period. One major reason for the slowdown in the agricultural sector isa sharp decline in (non-subsidy) public investment and input usage in agriculture which has adversely impacted theprofitability of crops. The decline in public investment in agriculture has been attributed to the expanding subsidieson agriculture. However, this trend has been reversed to some extent since the 9th Five Year plan. The Gross CapitalFormation in agricultural sector has gone up from 13.9 per cent during the 10th Plan period to 19 per cent during the11th plan period. This in part explains the improved agricultural performance over this period.The challenge of ensuring a vibrant and dynamic agricultural sector capable of sustaining the economic growth inother sectors requires a deeper engagement with the agrarian issue going beyond the economic aspects. There remainmany issues concerning agriculture on which debate is still continuing. It is not clear if the future of agriculture liesin moving towards corporate farming or the ‘land to the tiller’ model. Similarly, the fragmentation of the land holdingmay have somewhat altered the contours of the conflict in the arena of agriculture but agrarian relations continue tohave significant political implications. Understanding the organic linkage of agriculture to the socio-cultural realityof the rural area can provide us insight into the root cause of conflict and social unrest that haunts many parts of Indiatoday. Daniel Thorner’s classification of the rural population into mazdoor, kisan and malik may have lost some ofits analytical edge so far as the economic understanding of the agricultural sector is concerned but it still retains itsutility if we want to understand the issue in a holistic framework.  qYOJANA June 2014 3

DELHI VISION IASTM JAIPUR www.visionias.in www.visionias.wordpress.com Under the Guidance of Ajay Kumar Singh (B.Tech. IIT Roorkee) Jaipur Centre: Under the Guidance of Anoop Kumar Singh2012 Congratulations to our toppers... Raghvendra Singh, Rank - 12 Sonia Meena, Rank - 36 Rishi Garg, Rank - 49 Divya Mittal, Rank - 68 Nitin Singhania (51), Ramesh Ranjan (76), Madhusmita Sahoo (133), Pradeep Dahiya (142), Akhilesh Variar (153).. 50 Plus Selections..... 2011 Toppers: Gitanjali Brandon (6), Harshika Singh (8), Amrutesh (10), Nikhil Kalyan (60), Chandra Vijay (94), Garima Singh (109).... (25 Plus Selections....) To download topper’s answer booklets, interview transcripts: www.visionias.in INNOVATIVE CLASSROOM PROGRAM Admission GENERAL STUDIES 2015 Limited Open Seats Classes Start 17 June 10 AM - 1 PM G. S. Advance Course 2014 Classes Start 4 Sept. Classroom ALL INDIA IAS TEST SERIES 2014 & 2015 Online All India Rank, Micro & Macro: Performance Analysis, Cyclic, Flexible & Expert Discussion INNOVATIVE ASSESSMENT SYSTEMTM Hindi/Eng. G. S. MAINS, G. S. PRE., APTITUDE TEST Philosophy, Sociology, Public Admn., Psycho., Geography, Essay Rajinder Nagar Test Centre: 75, 3rd Floor, Old Rajinder Nagar Market, Near Axis Bank, Delhi-60G.S. 2014 & 2015, CSAT, PHILOSOPHY JAIPUR CENTRE Hindi / English Ground Floor, Apex Mall, Jaipur Anoop Kr. Singh & Team Vision IAS 9001949244, 9799974032Head Office 1/8-B, 2nd Floor, Apsara Arcade, 103, 1st Floor B/1-2, 09650617807 YE-34/2014 Near Gate 6, Karol Bagh Metro, Ansal Building, Behind UCO Bank, 09968029039 09717162595 New Delhi-110005 Dr. Mukherjee Nagar, Delhi-094 YOJANA June 2014

capital formation lead articleInvesting to Propel Growth in Indian Agriculture Ashok Gulati Surbhi Jain P ropelling in the recent Plan periods. But it has growth inagriculture fluctuated widely during various is critical as research Plan periods (Figure 1). It witnessed has revealed that GDP a growth rate of 4.8 per cent during growth originating in the Eighth Plan period (1992–97), but thereafter, it saw a downturn towards agriculture is at least the beginning of the Ninth Plan period (1997–2002) and the Tenth Plan period twice as effective in reducing poverty (2002–07), when the agricultural growth rate came down to 2.5 per as GDP growth originating outside cent and 2.4 per cent respectively. During the Eleventh Plan (2007-12), agriculture (World Development agri-GDP growth bounced to 4.1 per cent, but then again fell to 3.0 per cent Report, 2008). In that sense alone, true in the first two years of the Twelfth Plan (2012-17). On a decadal basis, What growth rate is inclusiveness of Indian growth model agri-GDP rate accelerated from an needed in agriculture, average annual rate of 2.9 per cent and what is plausible, can come true only when agriculture during the 1990s (1991-92 to 2000- 01) to 3.4 per cent during the 2000s to make sure that does better than what it has done in the (2001-02 to 2013-14), with an overallpoverty banishes as fast growth for the entire period being past. This will override all models that 3.2 per cent. A significant note here as possible in India? is that the coefficient of variation Our take is that Indian try to achieve inclusiveness through (CV), as a measure of volatility, for growth in agri-GDP is almost four agriculture has the special concessions to a particular times than the CV observed in overall potential to grow at 5 GDP growth during this period. This per cent per annum for community, caste, or class. What calls for enhanced investments inthe next ten years, if one irrigation and agri-R&D to not only were ready to take bold growth rate is needed in agriculture, increase productivity of agriculture policy decisions, and but also its stability. Have we invested thereby contribute its and what is plausible, to make sure enough in these areas? Not really. most important role in For example, at the beginning of alleviating poverty, that poverty banishes as fast as possible the Twelfth Plan, there were 337hunger and malnutrition major and medium irrigation projects in India? Our take is that Indian agriculture has the potential to grow at 5 per cent per annum for the next ten years, if one were ready to take bold policy decisions, and thereby contribute its most important role in alleviating poverty, hunger and malnutrition. Agri-growth Performance since Economic Reforms of 1991 The average annual rate of growth in agriculture & allied sector during the entire period (1991-92 to 2013- 14) comes at 3.2 per cent – much lower than the 4.0 per cent targetedAshok Gulati is Chair Professor-Agriculture in The Indian Council for Research on International Economic Relations (ICRIER). Aneminent agricultural economist, he was the Chairman, Commission for Agricultural Costs & Prices, Govt. of India. Earlier, he was theDirector in Asia for the International Food Policy Research Institute (IFPRI). He had also served as a member of of the EconomicAdvisory Council of the Prime Minister of India. Surbhi Jain is Director, Commission for Agricultural Costs & Prices.YOJANA June 2014 5

Figure 1: Comparative growth in GDP (overall) and 13.9 per cent during the Tenth Plan GDP (agri) during Plan periods (2002-07) and further to 19.0 per cent during the Eleventh Plan. Thus, as perSource: Central Statistics Office (CSO). All figures are at 2004-05 prices. The figures centage of agri-GDP, AGCF has morefor 2012-13 and 2013-14 are as per the Advance Estimates of CSO released on 7th February, 2014 than doubled during the last decade (figure 2). This is perhaps the biggestrequiring an indicative budget of Formation in agriculture (AGCF), change that has occurred in Indianmore than Rs 4,22,012 crore. Against which is actually investment in agriculture, and if sustained, will bringthis need, the annual allocation for agriculture, from both the public and rich dividends in due course.irrigation is less than Rs 20,000 crore. private sectors, as a percentage toThis speaks of the neglect of investing agri-GDP. With an assumed ICOR It is interesting to note here thatin development of water resources and in agriculture at 4:1, to get four per the public sector accounts for onlyits proper management. cent growth in agriculture, investment 20 per cent of the total investment should be around 16 per cent of agri- in agricultural sector in India; 80 perGrowth and Investment in GDP. During much of the period from cent comes from the private sector.Agriculture 1990-91 onwards till 2007-08, AGCF In the early 1980s, the shares of the at all India level was always below public and private sectors (including Generally, the growth of a sector this threshold. No wonder then that household sector) in AGCF weredepends upon the investments made the average annual rate of agri-GDP roughly equal, but by the early 2000s,in that sector, its incremental capital- hovered around 2-3 per cent. From the share of the private sector wasoutput ratio (ICOR) and the efficiency Ninth Plan (1997-2002) onwards, a four times larger than the share ofof capital in that sector, a la Harrod- reversal in trend has been achieved the public sector. The private sectorDomar model. Therefore, the key resulting in increase in this ratio to investment is complementary to publicdriver of agri-growth is Gross Capital investment in agriculture but responds much better and faster to the incentiveFigure 2: AGCF as a Ratio of GDP (agri) structures in agriculture. This indicates that improved incentives in the formSource: National Accounts Statistics, CSO; Agricultural Statistics at a Glance, various of better returns or better prices haveissues played a catalytic role in acceleratingNote: All Estimates are at 2004-05 prices agricultural growth during the latter half of the 2000s decade. It may be noted here that public investment in agriculture in India as measured by National Accounts Statistics (NAS) comprises largely of major and medium irrigation projects. The expenditures on R&D, rural infrastructure, rural electrification, education etc are accounted under other heads of investment expenditures. The estimate of public investment in agriculture used here is as reported by NAS, and therefore somewhat underestimates the public investments that are critical to propel growth in agriculture. If we account for these, then AGCF would easily cross much above 20 per cent of agri- GDP. With an ICOR of 4:1, this should then comfortably give us 5 per cent growth in the agricultural sector. But the agricultural sector is still having an average of 3-4 per cent growth. What are the constraining factors to agricultural growth if investments6 YOJANA June 2014

are not deficient? Should the overall the form of subsidies than public 14 as per the Fertilizer Association ofresources going to agriculture be investments. Almost 80 per cent is India. Increase in the fertilizer subsidyincreased or is it that the composition in the form of subsidies and only 20 has been due to increased consumptionof those resources needs correction? per cent is investment in agriculture of fertilizers which has been largelyOr is it that the ICOR itself has (figure 3). met through imports, sharp increasechanged to say 4.5:1 or even 5:1, in prices of finished fertilizers & theirwith emerging labor scarcity? Subsidies inputs in the international market butOr that this sector suffers from stable domestic farm gate fertilizerdemand constraint? Or are there any The three major input subsidies prices (especially in the case of urea).other structural problems that need are (a) fertilizer subsidy that involves There are clear indications that thisoverhaul to allow this sector to grow provision at retail prices lower than subsidy has led to imbalanced use ofsustainably at more than 5 per cent the cost of producing or importing N, P and K in states like Punjab andper annum? Could these be on the fertilizers, (b) irrigation subsidy given Haryana which has deteriorated soilmarketing side, asking for building by charging user charges below the conditions and raised questions on theup of efficient value chains from farm expenditure on the operation and environmental sustainability.to processor to organized retailers? maintenance of surface irrigation;These are some of the questions that and (c) power subsidy through user In addition to the input subsidies,need a deeper probe. Here we look charges that are lower than the cost of food subsidy is provided for makingat only the nature and magnitude of supplying power. Other subsidies may food (mainly wheat & rice) availablepublic expenditure on agriculture and be in the form of credit subsidy through at affordable prices to a large sectionhow that can be rationalized to propel an interest subsidy on credit obtained of the population. It represents thegrowth in agri-GDP. from financial institutions and through basic direct cost incurred by the outright waiver of loans; subsidy on central government on procurement,Public Expenditure on Agriculture crop insurance and subsidized sales stocking and supplying to various food of seeds. A major proportion of these based safety nets of PDS and other The total public expenditure on subsidies is accounted by fertilizer welfare schemes. During the last fewagriculture (including public investment subsidy which has shown an increasing years, food subsidy has increased by& input subsidies) as a ratio of GDP trend in recent years. Fertilizer subsidy more than ten times from Rs 17,494(agri) has almost doubled in the last has increased by around five times in crore in 2001-02 to Rs 92,000 croredecade from 8.6 per cent in 1993- the last ten years from Rs 12,595 crore in 2013-14 (RE) at current prices.94 to 20.6 per cent in 2009-10. This in 2001-02 to Rs 67,971 crore in 2013- This is expected to increase furthercompares well with international trends 14 (RE) at current prices. However, as with the extension of National Foodand may be towards a higher side. a ratio of GDP (agri) it has increased Security Act, 2013. Together, foodThus, it appears that there are sufficient from 2.6 per cent to 3.5 per cent during and fertilizer subsidies, accounted forpublic resources going to agriculture. the same period. Additionally, there has an expenditure of more than Rs 1.5But the bane lies in the composition of been a hidden element of carryover of lakh crore in 2013-14. In comparison,that expenditure - Indian agriculture liabilities in these estimates to the tune public investment in agriculturereceives public resources more in of more than Rs 30,000 crore in 2013- was around Rs 22, 000 crore -only one-fourth of this. This is reflectiveFigure 3: Composition of Public Expenditure on Agriculture of the imbalance between use of subsidies & investments as policySource: CSO, Agricultural Statistics at a Glance, Various Issues instruments for agricultural growthNote: All Estimates are at 2004-05 prices and poverty alleviation. This needs to be urgently corrected especially when the marginal returns from expenditure on subsidies is much less than that on investments. Marginal Returns higher on Investments than on Subsidies Given fiscal constraints, there is always a trade-off between allocating money through subsidies and increasing investments. Subsidies, unless they are well targeted and are for a limited period, are not equitableYOJANA June 2014 7

Figure 4: Returns in Agricultural Growth and Poverty Reduction to Investments and SubsidiesAgricultural Growth Poverty ReductionSource: Fan, Gulati and Thorat 2007& efficient and crowd-out public help divert budgetary support towards There are technology options —investment in agriculture research, higher return investment but also Aadhaar card-linked bank accountsirrigation, rural roads and power. There ensure appropriate use of resources, for instance — that make it possibleis an inherent moral hazard in use of particularly fertilizers, and also address today to deliver subsidies directlysubsidized inputs such as fertilizer the issue of controlling environmental and most efficiently to targetedand water and their excessive use damage. The present scale of subsidy recipients.leads to deterioration in the aquifers in the agricultural sector poses a highand soil creating an environmentally fiscal burden on the central and state Will the new Government bite theunsustainable system. Investments take governments. Also, high agricultural bullet and contain subsidies whiletime to fructify but result in sustainable input subsidies result in inefficient enhancing investments in a transparentand higher growth. Public investment resource allocation; crowding out manner with time bound results?especially in R&D drives technical of public sector investment; and Anyone who has the political art ofchange and productivity growth in degradation of the environment reorienting resources from subsidiesagriculture, raising farm incomes and and thus, affecting the agricultural to investments will be rewardedreducing prices for consumers. This productivity. Agricultural growth and handsomely, in a political economyhas been corroborated by research2 poverty reduction depend critically context, and which will be a win-winwhich shows that the marginal returns on investments in rural infrastructure situation for the country as it willin terms of poverty alleviation or (irrigation, roads, transport etc.) as accelerate agri-growth to above 5 peraccelerating agricultural growth are well as investments in markets, rural cent, and reduce poverty even faster.much lower from input subsidies finance and research & extension.than from investments in rural roads Thus, this imbalance between Endnotesor agri-R&D or irrigation or even subsidies and investments needs toon health and education (figure 4). be urgently corrected for sustainable 1. Shenggen Fan, Ashok Gulati andThe allocation of public funds to growth in Indian agriculture and Sukhadeo Thorat, ‘Investments,subsidies for goods such as agricultural overall inclusive growth. Reducing Subsidies and Pro-Poor Growth in Ruralinputs that primarily benefit private input subsidies will free public India’, Agricultural Economics 39, 2008.individuals can divert funds away sector resources for building offrom public goods and other socially rural infrastructure that can augment Referencebeneficial expenditures. supplies, raise incomes and increase demand for agricultural products. Shenggen Fan, Ashok GulatiThe way forward We need to move to a system where all subsidies are targeted and given and Sukhadeo Thorat, ‘Investments, The above analysis shows that through conditional cash transfers.rationalizing subsidies will not only Subsidies and Pro-Poor Growth in Rural India’, Agricultural Economics 39, 2008. q (E-mail:[email protected] [email protected])8 YOJANA June 2014

YE-56/2014YOJANA June 2014 9

overview in-depthDissecting Agricultural Performance since Mid1990s Ramesh ChandAgricultural development A griculture achievement of green revolution and strategy should be secto r i n I n d i a not willing to acknowledge the recent expanded to bring and in many other accomplishments as these are not countries faced several concentrated on revolution around marketing in its fold to tough challenges for one or two crops, or, concentrated in a improve competition, couple of years after particular geographic region. Second, implementation of the WTO agreement high food inflation has overshadowed reduce efficiency on agriculture in year 1995, primarily progress on production front. Proper and harness market due to sharp fall in prices of agricultural understanding of the decline andinnovations. This should commodities. The fall in prices led improvement in performance of enable farmers to get to perceptible decline in growth of agriculture since the mid 1990sbetter prices and higher agricultural output after the mid 1990’s is very important for shaping the share in prices paid by which had several consequences future of Indian agriculture. Thisend users without adding including widespread agrarian distress. paper compares the performance ofto inflation. Without this, It was a great challenge and formidable agriculture in the recent years withit will be very difficult to task to arrest the decline and to reverse the preceding decade and provides sustain the agricultural the slowing growth of agriculture an update on the achievements of theachievements of the last sector. Several initiatives were taken agriculture sector in recent 10 years decade in the coming by the central and state governments or so. It also discusses, with evidence, to address this challenge. The last how and when the turnaround in years nine years (2004-05 to 2012-13) agriculture took place, for developing have witnessed impressive revival of proper understanding of India’s agriculture growth rate even though agriculture growth story. growth rate of non agriculture sector decelerated in recent years. Besides Growth Trend and Composition growth per se, the quality of growth has also seen considerable improvement The country achieved close to 5 and there has been progress relating per cent average annual rate of growth to inclusiveness, regional equity, in agriculture during 8th Plan (1992-93 and nutrition security. Though these to 1996-97) and fixed a target of 4.5 achievements are highly significant per cent growth for the 9th Plan (1997- and unique in many respects, there 2002). Against this target, the actual is not adequate appreciation or growth rate turned out to be 2.48 per realization about these in the country. cent during the 9th as well as 10th Plan. Many of us seem to be obsessed with The target growth rate was fixed at 4 per cent for 11th Plan and the same hasThe author is Director, National Centre for Agricultural Economics and Policy Research, New Delhi. Earlier he had served as Professorand Head – Agricultural Economics Unit at Institute of Economic Growth, Delhi. He has also been a Visiting Professor at University ofWollongong, NSW Australia (2000); and Visiting Fellow at Institute of Developing Economies, Chiba Shi, Japan (2003). He worked asconsultant for FAO, ESCAP, OECD, World Bank, Indian Institute of Foreign Trade, Delhi and Government of Punjab. He is the authorof a number of books and research papers published in reputed national and international journals.10 YOJANA June 2014

been kept for the 12th Plan. Unlike the Fig 2: Growth rate in GDP agriculture and alliedprevious two Five Year Plans, the 11th sector at 2004-05 pricesPlan recorded an average growth rateof 4.06 per cent in the agricultural Trend growth rate: %/year 4 3.15 1.92 3.75GDP. The growth rate during 2012-13, which is the first year of the 12th 3.5 1996-97 to 2004-05 toPlan has been 1.4 per cent and the 3 2004-05 2012-13advance estimate for 2013-14, whichis the second year of 12th Plan, puts 2.5the growth rate at 4.6 per cent. The 2growth rates reveal that after growingat 2.5 per cent for 10 years, during 9th 1.5and 10th Plan, agriculture growth in 1the subsequent period has acceleratedto 3.5 per cent level. It is interesting 0.5to find out precisely in which year the 0turnaround in growth rate took place, 1988-89 toand how the period after turnaround 1996-97compares with the correspondingperiod before turnaround. According to a study done by another in 2005-06. allied) after 2004-05 is available tillRamesh Chand and Parappurathu year 2012-13 i.e. for nine years. The(2012), GDP of agriculture witnessed The above evidence clearly points trend of growth rates in GDP duringa structural break in the year 1995- out that the performance of agriculture recent decade (nine years only) at96, which brought down the growth during the last two decades can be constant prices and for similar twotrajectory, followed by another break divided in two phases: phase I from previous periods is presented in Figin the year 2004-05, which turned the 1995-96 to 2005-06 representing a 2. This shows that Indian agriculturegrowth path upward. The same can period of slowdown in agriculture, moved on a growth trajectory of 3.15also be seen from the decadal trend and, phase II beginning with year per cent per annum during 1988-89growth rates in the agricultural GDP 2005-06 representing a period of to 1996-97 which plummeted to 1.92beginning with the decade 1971-72 to recovery and acceleration in growth. per cent in the next nine years. This1980-81and ending with the decade Further, a comparison of growth was a very low growth having several2003-04 to 2012-13 (Fig. 1). When rates achieved during the decade adverse effects on farm economy andten years period is used to estimate beginning from 2004-05 is made with livelihood of farming community andtrend growth rates, two clear breaks the previous two decades. The data posed a serious threat to the nationalare observed, one in 1996-97 and on GDP of the sector (agriculture and food security.Trend growth rate: %/year Fig.1: Growth trajectory of GDP agriculture in various decades Some initiatives were taken from 1971-72/1980-81 to 2003-04/2012/13 towards the end of 10th Plan and during 11th Plan to revive the 4.00 sector . Consequently, the growth 3.50 rate accelerated to 3.75 per cent 3.00 during 2004-05 to 2012-13. It is a 2.50 matter of pride for the country that 2.00 agriculture sector moved back on 1.50 long term growth trajectory and now 1.00 approaching targeted growth rate of 0.50 4 per cent. 0.00 Broad based Growth Decade ending with year The increase in growth rate of agricultural output was not confined to a few segments or commodity groups or to dominant products. Rather, the growth has been experienced across the board. Within the subsectors, crop sector recorded 3.3 per cent andYOJANA June 2014 11

fruits and vegetables recorded 5.3 per Table 2: Trend growth rate in physical output ofcent annual rate of growth. Livestock selected crops/groups: (in per cent)output increased at 4.8 per cent perannum while fishery sector recorded Crop/ group 1994-95 to 2003-04 2003-04 to 2012-134.5 per cent growth rate. The rate ofgrowth in the recent decade has been Foodgrains 0.71 2.66historical in most cases. Growth rateof crop sector in recent nine years Cereals 0.81 2.61(2003-04 to 2011-12) has been 75per cent higher than the previous Pulses -0.64 3.31decade (Table 1). The growth rate inlivestock and horticulture growth was Rice 0.62 1.99higher by 41 per cent and fisheries by Wheat 1.03 3.6048 per cent over the preceding nineyears period. Maize 4.43 5.51 Gram -2.37 5.59 Pigeonpea 0.14 2.05 Oilseeds -1.65 2.47Performance of Various Crops Soybean 3.35 7.61 Foodgrain production in India Sugarcane -0.47 4.01increased from 190 to 206 million Cotton -2.23 10.46tonne (mt) between 1995-97 and Fruits and vegetables 2.64 6.262003-05 registering an increase of Vegetables 3.24 6.3716 mt in 8 years. In the next 8 years, Fruits 1.53 6.04foodgrain production increased bymore than 50 mt and reached 257 mt Banana 0.92 7.57by 2011-13. Rice, wheat and maize Mango 0.96 4.44witnessed a record increase in their Citrus 4.50 5.34production after 2003-05. Maize Onion 3.07 12.98production in the country was below10 mt till 1995-96 and crossed level Potato 2.90 8.94of 21 mt in year 2010-11. Thus, maize 15.1 million bales of cotton in 2003-05. 2011-13, production of fruits andproduction in the country doubled in Indian agriculture made another very vegetables increased to 235mt. Both15 years. noteworthy achievement by raising vegetable as well fruit productionPulse production in India stagnated output of sugarcane. Sugarcane increased by more than 60 per centaround 13 mt for 15 years from 1990- production in India reached close to in 8 years after 2003-05 which is91 to 2005-06. It showed record 300 million tonne in year 1999-2000 much higher than the growth in thegrowth in year 2010-11 with output and faced decline thereafter, cane previous period. These growth ratesclimbing up by 25 per cent in one production recovered in year 2006- have taken fruit production to 77 mtyear, from 14.6 mt to 18.2 mt. 07 in a big way. Current level of and vegetable production to 158 mt Soybean and cotton have shown sugarcane output is 350 mt and India during 2011-13.miraculous growth with doubling of is having large surplus of sugar. The increase in production ofoutput in about 8 years. India now India produced 114 mt of fruits onion and potato has been remarkable.produces 13.4 mt of soybean and 34.6 and vegetables in the mid 1990’s. In Onion production increased from 6.18million bales of cotton as against the next 8 years, production increased mt in 2003-05 to 16.9 mt in 2011-13.production of 7.3 mt of soybean and to 143 mt. Between 2003-05 and Production of potato, which increased by less than 2 mt in 8 years beforeTable 1: Trend growth rate in output of various sub sectors of 2003-05 showed an increase of nearly agriculture: (in per cent) 20 mt in recent 8 years.Sub sector 1987-88 1995-96 2003-04 Trend growth rates in production to to to of various crops are presented in tableCrop sector 2. The growth rate in many crops wasLivestock 1995-96 2003-04 2011-12 negative during 1994-95 to 2003-04,Fruits and vegetables 2.97 1.87 3.28 which has been reversed in the recentFishery sector 4.10 3.43 4.84 decade. In other cases, there has 4.29 3.79 5.33 been sharp acceleration. It is worth 7.22 3.02 4.48 mentioning that cotton production12 YOJANA June 2014

Table 3: Trend growth rate in production of livestock and fish: positive growth in agriculture, with (per cent/year) only 1.5 per cent annual growth. In the North West Himalayan region,Product 1994-95 to 2003-04 2003-04 to 2011-12 agriculture growth rate in Jammu & Kashmir and Uttarakhand was aroundMilk 3.78 4.72 2 per cent whereas agriculture was stagnant in the state of HimachalEgg 5.69 6.20 Pradesh. In West Bengal, agriculture sector was growing at about 2 perMarine fish 0.71 2.01 cent per annum. Agriculture sector was found to be shrinking in the stateInland fish 5.55 5.99 of Kerala.Total fish 3.04 4.30 Initiatives and Factors Underlying the Achievementsfollowed double digit growth in last Agricultural Growth at State10 years while soybean, maize and Level Performance of agriculturegram experienced more than 5 per improved in the last decade as a resultcent annual growth. Output of pulses, The growth rate in NSDP of strong policy and institutionalwhich was stagnating for quite some agriculture across states varies from support provided to the sector. Thetime, also moved on a rising trend (-) 1.15 per cent in Kerala to 5.91 major contributing factors are:with growth rate of more than 3 per per cent in Chattisgarh (Table 4).cent. The states like Madhya Pradesh, l Improvement in terms of trade Karnataka, Rajasthan, Jharkhand and for agriculture in the last 10 years The growth rates in output of Chattisgarh achieved more than 5 per and remunerative prices for farmhorticultural crops during the decade cent annual growth rate in agriculture, produce.1994-95 to 2003-04 and 2003-04 to and Gujarat, Tamil Nadu, Maharashtra2012-13 reveal grand success of the and Andhra Pradesh, exceeded the l H i g h e r u s e o f p r o d u c t i v i t yhorticulture in the second decade. national target of agriculture growth. enhancing inputs like fertilizerGrowth rate in fruits as well as Haryana, recorded close to 4 per cent and quality seed.vegetables accelerated from 2.64 per annual growth in NSDP agriculturecent during 1994-95 and 2003-04 even with high level of productivity. l Expansion of irrigation andto 6.26 per cent during 2003-04 to In east India, both Assam and Bihar increase in agricultural investments2012-13. Among vegetables, onion recorded more than 3 per cent annual supported by public sector capitalproduction recorded almost 13 per growth. formation.cent annual growth while potatoproduction increased by 8.9 per Uttar Pradesh and Odisha are l S u b s t a n t i a l i n c r e a s e i n t h ecent per year. Among various fruits, still stuck in low growth trap. The supply of institutional credit tohighest growth is observed in banana state of Punjab comes at the bottom agriculture.with 7.57 per cent. in the list of states which recordedPerformance of Livestock and Table 4: Growth rate in NSDP agriculture during 2004-05 toFishery Produce 2011-12 at 2004-05 prices in major states: (in per cent) All livestock and fishery products State Trend growth State Trend growthshowed higher growth after 2003-04 rate ratecompared to 1994-95 to 2003-04 Chhatisgarh 5.91 Haryana 3.94(table 3). Milk production growth Jharkhand 5.76 Assam 3.84accelerated after 2003-04, from 3.78 Rajasthan 5.63 Bihar 3.32per cent per annum to 4.72 per cent per Karnataka 5.59 Odisha 2.67annum. Growth in production of egg Madhya Pradesh 5.22 Uttar Pradesh 2.33accelerated from 5.69 to 6.2 per cent. Jammu & Kashmir 2.04After 2003-04, growth rate in marine Andhra Pradesh 4.94 West Bengal 1.98as well as inland fishery witnessed Maharashtra 4.84 Uttarakhand 1.95acceleration. Output of marine fish Tamil Nadu 4.21 Punjab 1.49increased by less than 1 per cent a Gujarat 4.08year during the 10 years period before   Himachal Pradesh -0.092003-04. The growth rate picked up to All India 3.70 Kerala -1.152 per cent in the recent decade. Inlandfish experienced more than 5.5 percent annual increase during 1995-96to 2003-04 which further increased toclose to 6 per cent.YOJANA June 2014 13

l Achievements in technology and Fig 4: Supply of certified or quality seed: (in Lakh quintal) strengthening of extension. 400l Initiatives like NFSM, RKVY and 350 347 BGREI and other missions and 300 programmes. 250 Seed: Lakh quintalsBetter Pricing 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Terms of trade between 200 127agriculture and non-agriculture, 150represented by ratio of implicit price 100 79 and sharply declined thereafter. Itdeflators of agriculture GDP to non- reached bottom level in year 2001-02agriculture GDP, followed a decline 50 and then started increasing slowly.of 7 per cent between 1997-98 and 0 The consumption of electricity in2004-05. Thereafter, agricultural agriculture picked up in year 2006-prices received by farmers increased quality seed has been a major factor 07 and the upward trend continuedat a faster rate under the influence for increase in agriculture production thereafter. The electricity consumptionof the substantial hike in the in recent years.  Similarly, use of reached 129 thousand GWh in yearminimum support prices, higher fertilizer which showed a meager 2010-11. Between 1998-99 andlevel of foodgrain procurement increase of 14 per cent during 1997-98 2005-06, electricity consumption inby government agencies, strong to 2004-05 increased by 50 per cent in agriculture declined by 7 per centdomestic demand and rise in next 7 years, from 18.4 million tonne and in next 5 years, it increased byinternational prices. Between (mt) of NPK in 2004-05 to close to 28 as much as 43 per cent.2004-05 and 2011-12, agricultural mt in year 2011-12 (Fig 5).prices relative to non-agricultural Expansion in gross irrigated areaprices have risen by about 30 per Electricity Consumption and showed somewhat similar patterncent (Fig.3). Thus, better pricing Irrigation Expansion as seen in electricity consumptionenvironment provided incentive to in agriculture. During the ten yearsfarmers to use more and better input Consumption of electricity for period from 1995-96 and 2004-05,and adopt modern technology. agriculture purposes and expansion of gross irrigated area increased by 10 gross irrigated area are closely linked million hectare from 71.4 millionHigher Use of Material Inputs (Fig. 6). Electricity consumption hectare to 81.1 million hectare. The in agriculture sector was 85.7 provisional data available for the Supply of certified or quality seed thousand GWh in year 1995-96. recent years shows an increase of 8.3in the country increased by about 50 The consumption increased to 97.2 million hectare in the next six years.per cent between 1997-98 and 2004- thousand GWh by the year 1998-9905 (Fig. 4).  In the next 8 years, the Conclusions and Lessonsseed supply increased by more than100 per cent. As seed is the carrier oftechnology, the growth in supply of Fig. 3: Terms of trade between agriculture and non-agriculture 135 129.8 130 125Terms of trade 120 During the last two decades, 115 since mid 1990s, Indian agriculture 110 107.8 100.0 has moved through two distinct 105 phases. The period from mid 1990s 100 to mid 2000s witnessed slowdown of agriculture growth from above 95 3.5 per cent to below 2 per cent. 90 This has been followed by a sharp turnaround in year 2005-06 which took agriculture back to above 3.5 per cent growth. The most important14 YOJANA June 2014

Fig 5: Use of fertilizer in India: NPK: (in million tonne) 05 to 2013-14. As no country can afford to keep real agricultural prices 30 rising for a very long time, therefore, 25 27.6 ways and means have to be devised to sustain profitability incentive. OneNPK: million tonne 20 18.4 way to maintain price or profitability 16.2 incentive for farmers is to increase their share in final prices paid by 15 consumers and other end users. The second source is technology 10 either through resource saving or through increase in productivity. The 5 agricultural development strategy in the last ten years has focused on 0 production and MSPs. For a long time, significant progress has not 1997-98 been made in agricultural markets 1998-99 like reforms in market regulation, 1999-00 development of infrastructure, entry 2000-01 of modern capital, and development 2001-02 of new models of marketing. Thus, 2002-03 agricultural marketing has not moved 2003-04 to the next stage of development 2004-05 (Ramesh Chand, 2012). Agricultural 2005-06 development strategy should be 2006-07 expanded to bring marketing in 2007-08 its fold to improve competition, 2008-09 reduce efficiency and harness 2009-10 market innovations. This should 2010-11 enable farmers to get better prices 2011-12 and higher share in prices paid by end users without adding tofactor for improved and impressive types of incentives. It also refutes inflation. Without this, it will be veryperformance of agriculture, post to some extent the argument that the difficult to sustain the agricultural2004-05, has been the increase in the interest in farming is diminishing. achievements of the last decade inprices received by the farmers. This We find the interest depends on the coming years.was a result of hike given to MSP, profitability from farming.increase in foodgrain procurement, (The paper is drawn from larger workincrease in global agricultural prices State level comparison of “From Slowdown to Fast Track: Indianand strong domestic demand for agriculture growth offers useful Agriculture Since 1995”, by Rameshfood. Favourable prices induced lessons. With the same set of national Chand, Working Paper 1/2014, Nationalfarmers to use better seed, apply policies and macro environment, Centre for Agricultural Economics andhigher doses of inputs, take better some states achieved more than 5 Policy Research, New Delhi.)care of crops and livestock, adopt per cent growth and some couldimproved technology and methods not grow even at 3 per cent. Lowof production. This process was growth states, particularly Uttarfurther aided by liberal supply of Pradesh and Odisha, can learn a lotinstitutional credit and irrigation from the experience of the states likeexpansion. Slowdown of agriculture Chhatisgarh, Jharkhand, Rajasthan,growth and its recovery in response to Karnataka, Madhya Pradesh, Andhrachanges in price and non price factors Pradesh and Maharashtra.clearly establish that Indian farmersrespond rather strongly to various It is a challenge to maintain the growth tempo achieved during 2004- Fig. 6: Progress in electricity consumed in agriculture and expansion of irrigationElectricity consumption and Irrigated area140Electricity consumption in agriculture 129.1 References 1995-96130 000 GWh 89.4 1996-97120 Gross irrigated area million hectare Ramesh Chand (2012). Development 1997-98110 Policies and Agricultural Markets, 1998-99100 88.6 Economic and Political Weekly, Vol. 1999-00 XLVII, No. 52, 53-63, December 29. 2000-0190 81.1 2001-028085.7 Ramesh Chand and Shinoj 2002-037071.4 2003-0460 Parapppurathu (2012). Temporal and 2004-05 2005-06 Spatial Variations in Agricultural Growth 2006-07 2007-08 and its Determinants. Economic and 2008-09 2009-10 Political Weekly, Vol. XLVII No. 26 & 27: 2010-11 55-64. June, 30.  q (E-mail : [email protected])YOJANA June 2014 15

YE-40/201416 YOJANA June 2014

roadmap visionBuilding State capacity in India Ajay Shah T here is considerable can build core public goods. Only the anguish in India today State can address the three market about malfunctioning failures of externalities, market State apparatus. It is power and asymmetric information. important to distinguish In these areas, an active State is unambiguously required. Every between objectives and civilized country has a capable State which performs these functions and execution. Reasonable men may avoids interfering with the freedoms of citizens in any other respect. The disagree about whether or not it is challenge of State capacity is that of efficiently converting expenditures useful for the Indian government into public goods outcomes while avoiding unintended consequences. to run NREGA, or a system of India has fairly sophisticated capital controls, or censorship of thinking and policy discussion on the question of what government should ...an active State electronic media, or traffic lights. But do. The binding constraint today is unambiguously lies in State capacity, which mayrequired. Every civilized regardless of the merits of each of be defined as the ability to convert country has a capable objectives + resources into outcomes. State which performs these objectives, we can agree that we As Pritchett (2009) says, `I argue these functions and that India is today an ailing state, aavoids interfering with should have the ability to achieve the nation-state in which the head, thatthe freedoms of citizens is the elite institutions at the national in any other respect. desired outcomes on stated objectives. (and in some states) level remain The challenge of State sound and functional but that this head capacity is that of In previous decades, there was a is no longer reliably connected via efficiently converting nerves and sinews to its own limbs’.expenditures into public great focus on dismantling controls, All protagonists in the public policy goods outcomes while debate should be able to agree on avoiding unintended reversing the license-permit raj and the need to solve the implementation shortfall which affects the Indian State. consequences putting an end to industrial policy As an example, consider the field of infrastructure. The old debate about where the government determines what industries or technologies are good. There is, indeed, a need to comprehensively back away from those approaches, which were pursuing the wrong objectives. However, the challenge today is not just of deregulation, of stroke-of-the- pen reforms which eliminate laws and close down existing government organizations. There is no escaping the role for the State in core public goods such as safety. Only the State can build the criminal justice system, the defense forces, and manage international relations. Only the State'The author currently co-leads the Macro/Finance Group at NIPFP in New Delhi. He has held positions at the Centre for MonitoringIndian Economy, Indira Gandhi Institute for Development Research and the Ministry of Finance, and has engaged in academic andpolicy-oriented research in the fields of Indian economic growth, open economy macroeconomics, public finance, financial economicsand pensions. He studied at IIT, Bombay and USC, Los AngelesYOJANA June 2014 17

infrastructure was about public versus thoughts on how to construct State administration that are conducive toprivate production of infrastructure capacity. obtaining performance. These ideasservices. The bulk of infrastructure can be valuable for all three: thecan indeed be constructed and The black box view legislature, executive and judiciary.operated by private firms but thedesired outcomes are obtained only At the simplest, every organization Principles for assigning roles andif the government delivers on the can be viewed as possessing a functionsfunctions of planning, contracting leadership which utilizes certainand regulating. There is no escaping resources in order to achieve To a maximal extent, need clearthe problems of State capacity, in certain objectives. The organization problem statements that can beachieving government structures will perform when two tests are assigned outside departments ofto make internally consistent plans satisfied. First ,is the leadership of governmentfor infrastructure, to execute sound the organization in full control of thecontracts that shape the behavior of way in which resources are utilized. To improve accountability, weprivate firms in the right ways, and to Second, is whether the leadership must sharpen the problem statement.regulate private firms once projects is accountable. An accountable For example, a precise problemhave been completed. Almost all the leadership which is in control of statement such as `Deliver 24 hourproblems of Indian infrastructure the organization will respond to water supply at stated engineeringtoday can be traced to deficiencies of failures and make changes on the characteristics of purity and pressure’the State in planning, contracting and way things are done so as to achieve makes possible contracting-out fromregulation. When there are infirmities the desired outcome. This motivates the Principal (government) to anin planning, contracting or regulating, an exploration of accountability and Agent (a water utility). The Agent canPPP contracting can give outcomes operational autonomy.that are worse than the erstwhile State- Within the main structure ofcentric approaches. Accountability through elections, government, the strategy must legislature and judiciary hence be one of identifying all The bulk of infrastructure can possible sub-problems whereindeed be constructed and operated In every well functioning contracting-out can be done to democracy, there is a `long route an Agent either to a private firm by private firms but the desired of accountability’ that works or to a public body. This would outcomes are obtained only if through elections, legislature and leave the minimum possible set of the government delivers on the judiciary. The ruling administration problems where contracting-out is functions of planning, contracting is accountable in general elections. not feasible left to be performedand regulating. There is no escaping There is a weak mechanism through by government itself, where we the problems of State capacity, in which the performance of a ministry are down to the long route of achieving government structures affects the job security of the minister.to make internally consistent plans The legislature exerts checks and accountability.for infrastructure, to execute sound balances upon the executive (Kapur contracts that shape the behavior and Mehta, 2006). The judiciary then have no interest in the process of of private firms in the right ways, prevents transgressions of the rule of winning the next elections. It focuses and to regulate private firms once law to the extent that this is enabled on one sub-problem, that is coded into projects have been completed. through well drafted laws. its contract. It is held accountable for delivering on that one problem. Public Most people agree that the However, this `long route of bodies work better when there is agovernment should embark on accountability’ is a diffused form of sharp and clear problem statement.eliminating salmonella in the supply accountability. The persons working in As an example, a central bank can bechain of eggs and meat. But once one Ministry or in a public body often organized around an inflation target.such an objective is agreed upon and feel little pressure from the comingadequately resourced, the question general elections or Parliament. As The Agent, the central bank, isarises about how government should be long as laws are not visibly violated, given the objective of delivering 4organized so as to translate objectives the judiciary is quite respectful of per cent CPI inflation and certainand resources into outcomes. This is executive discretion, particularly strictures are imposed upon failure.the defining bottleneck in India today. through the `expert body doctrine’. This generates accountability. InIn this article, we ponder over some Improvements in the working of the contrast, if the objectives of a central legislature and the judiciary will bank are poorly stated, this creates an undoubtedly improve accountability environment of failure. and thus increase State capacity. In this article, we treat the working of the legislature and the judiciary as given, and focus on strategies for public18 YOJANA June 2014

The fundamental principle of can be eased in external organizations functions with the government andmanagement is that there must be whether in the public or private not with regulators where operationalan objective, the performance must sectors. autonomy is desired.be measured, and success/failureshould have consequences. This is Political considerations must Going from a Khap Panchayat toinfeasible within the main structure precede the contracting-out the rule of law requires preciseof government. Within the main objectives and narrow powersstructure of government, the strategy When the Principal writes downmust hence be one of identifying a clear objective that the Agent must In a feudal environment, variousall possible sub-problems where perform, political considerations interest groups lobby with the Statecontracting-out can be done to an must be taken into account before to obtain help. The powers of theAgent either to a private firm or to phrasing the objective.As an example, State have no limits. State structuresa public body. This would leave the political considerations are legitimate have discretion about the purposes tominimum possible set of problems considerations in planning the highway which the coercive power of the Statewhere contracting-out is not feasible system. For this reason, the planning is applied. As an analogy, a person goesleft to be performed by government function of determining what highways to a khap panchayat of powerful villageitself, where we are down to the long are to be built should be placed elders with a grievance, and the khaproute of accountability. Politics in the under political control e.g. within a panchayat chooses whether or not toreal world is inevitably an arena of Ministry. use its power in order to help him.complex, imprecise and conflictingobjectives. Writing down precise Once a decision has been made An essential feature of the rule ofobjectives is not easy. The job of public ,say to build an expressway from law is the establishment of public Bombay to Calcutta, this can be administration structures through Politicians are the ones best handed out to a public body such equipped to hear rival interest as NHAI which can do contracting which executive discretion ingroups and make political decisions, and then to a private firm which helping a supplicant in open ended as they are the ones accountable can build the highway. If the Agent ways is removed. This requires ain elections. These decisions should is given a political objective e.g.take place close to the Cabinet and if NHAI is tasked with choosing new wave of well drafted laws can generally not be contracted what highways to build, this will which have precise objectives and out. Problem statements that create conflicts in management and only authorize coercive power to are contracted out either to a diffuse accountability. Politicians the minimum extent required to public body or to a private firm will legitimately interfere in the achieve those precise objectives. should be precisely stated and working of the Agent. Accountability should only require technical will be lost as the leadership of the From a public choice theory inputs in translating the objective Agent will be able to say that their perspective, we see politicians and into execution. Bureaucrats and work was undermined by political bureaucrats as self-interested actors.technical experts should not dabble interference. When there is vagueness of objectives and powers, this sets the stage for in politics and vice versa. Political objectives require non-performance, where vagueness is decisions by elected representatives used to pursue personal objectives. Aadministration in the departments of of the people. Politicians are the ones feudal lord pursues his own interestsgovernment is one of sifting through best equipped to hear rival interest above the interests of anyone else.the fog and emerging with a list of groups and make political decisions, As an example, when a firm or anprecise problem statements, which can as they are the ones accountable in industry faces competitive pressure, itthen be contracted out, thus leaving as elections. These decisions should is quite common in India to approachlittle as possible to be done within the take place close to the Cabinet and government or regulators and ask formain structure of government. In the can generally not be contracted out. help. The instinct of helping friends,international discourse, contracting- Problem statements that are contracted or obtaining IOUs by helping powerfulout is better from the viewpoint of out either to a public body or to a people, is ingrained in everyone. Allaccountability. In addition, in India, private firm should be precisely stated too often, help is given by relaxingcontracting-out is better as the human and should only require technical rules for the industry which is doingresource and management problems inputs in translating the objective into badly or making life difficult forare greatest in core government and execution. Bureaucrats and technical new technology which is creating experts should not dabble in politics competitive pressure. These are feudal and vice versa. One example of strategy methods; they are khap panchayat is found in Srikrishna (2013) which mechanisms; they interfere with the explicitly identifies and places political working of competitive markets. They have no place in modern India.YOJANA June 2014 19

An essential feature of the rule pursue the vague objective of `the public bodies be well specified. Inof law is the establishment of public interest of investors’. In keeping addition, every public body mustadministration structures through with the predictions of public choice have clarity of purpose. Even ifwhich executive discretion in helping theory, SEBI has vigorously used sub-problems P1 and P2 are well-a supplicant in open ended ways is Section 11B in writing regulations posed, if both are placed in the sameremoved. This requires a new wave of and in writing orders. The presence organization, there is the possibilitywell drafted laws which have precise of 11B in the SEBI Act has supported of a loss of accountability when theseobjectives and only authorize coercive the feudal mindset at SEBI, where sub-problems are conflicting or ifpower to the minimum extent required supplicants come into SEBI and one objective overwhelms another. Itto achieve those precise objectives. articulate grievances. is all too easy for the Agent to claim that it failed on objective P1 as it As an example, Section 11B of the A new wave of well drafted laws, was pursuing objective P2, and thatSEBI Act features astonishing powers on the lines of Srikrishna (2013), are it failed on objective P2 as it wasfor the pursuit of an astonishingly required, which articulate precise pursuing objective P1.vague objective: objectives, give the executive the minimum possible powers through As an example, RBI has been ... if after making or causing to which those objectives can be given the objectives of monetarybe made an enquiry, the Board is achieved, and hold the executive policy, investment banking for thesatisfied that it is necessary, - (i) in accountable for performance. A sea government and banking regulation.the interest of investors, or orderly change in perspective is required, from This arrangement suffers from conflictsdevelopment of securities market; thinking of the executive as a feudal of interest. It is possible to do well onor (ii) to prevent the aairs of any authority armed with vast powers, the investment banking objective by to thinking about the executive as distorting banking regulation and A new wave of well drafted laws, being held accountable for converting monetary policy. It is possible to on the lines of Srikrishna (2013), precisely stated objectives into do well on the banking regulation outcomes, under an environment of are required, which articulate the rule of law. The board should not be a show- precise objectives, give the piece: All important decisions The law is a contract between the should take place at the board. executive the minimum possible Principal and the Agent Shareholders should not powers through which those meddle in the working of the There are three different objectives can be achieved, and mechanisms for contracting out: organization other than through hold the executive accountable the appointment process of the for performance. A sea change 1. Contracting-out to a private firm board, and the working of the in perspective is required, from through a contract between the board. Second, the board should thinking of the executive as a Principal and the Agent, which is have a majority of independent feudal authority armed with vast thereafter adjudicated under the directors, to prevent excessive powers, to thinking about the Indian Contract Act of 1872. influence of insiders, who have anexecutive as being held accountable incentive to be lazy and cover up for converting precisely stated 2. Contracting-out to a public body mistakes. Third, the board shouldobjectives into outcomes, under an that is established by executive work in an adversarial way, with environment of the rule of law. order. repeated recourse to formal votingintermediary or other persons referred 3. Contracting out to a public body that in resolving confliicts.to in section 12 being conducted in is established by an Act.a manner detrimental to the interests objective by distorting monetaryof investors or securities market; In each case, there is a legal policy and investment banking. Thisit may issue such directions, - (a) instrument (the contract, the executive leads to a loss of accountabilityto any person or class of persons order, or the Act). The principles as failure and the action can bereferred to in section 12, or associated articulated in this article should shape explained away on the grounds thatwith the securities market; or (b) to this legal instrument under all three other objectives were being pursued.any company in respect of matters cases. The reverse problem arises whenspecified in section 11A, as may be multiple government agencies areappropriate in the interests of investors Principles pertaining to public placed in charge of the same problem.in securities and the securities market. bodies This leads to a balkanization of lawWith this section, the managementof SEBI has been given powers to Every public body must have a clear objective It does not suffice to require that the problem statements placed with20 YOJANA June 2014

and regulation, diffuses accountability These principles are equally argues that the lack of operationaland generates extreme legal risk for relevant for public bodies and can be flexibility and independencethe private sector. Sound design of adapted into the public sector setting hampers their ability to deliverorganization structures in government as four rules: performance. On the other hand, inneeds to avoid this problem also. an environment where objectivesHence, two distinct perspectives are 1. All important decisions should and accountability mechanisms arerequired. At the level of the Principal take place at the board; there not clearly defined, and sweeping(government), the task is that of should be no centre of power other powers are given, there are importanttranslating the overall objective of than the board. The government risks in having operational flexibilitypublic goods and addressing market should not meddle in the working and independence in the hands offailures into a large number of concrete of the public body other than unelected bureaucrats. There is ansub-problems which can be contracted through the appointment process, important difference between aout with sharp accountability. At the and the positions taken in board Ministry headed by a person who haslevel of each Agent, when more than discussions by nominees of the no job security as opposed to a public government. body headed by an unelected person High performing public bodies are who has no risk of losing his job. those which feature a blend of 2. In most situations, public bodies will work better when independent Some argue that the lack ofhigh clarity of purpose, precise and experts are in a majority in the operational flexibility on humanlimited powers, high accountability board. resource policies and in contracting is a mechanism through which politicians mechanisms, high independence 3. All decisions should be taken are kept in check. At the same time, and high operational flexibility. through a formal process of voting the danger of abuse of these powers is These features should be seen with public disclosure of the voting entirely about the lack of accountability. as a package deal. Independence record. If the objectives are clear, the powers and operational flexibility are anessential feature of performance by 4. The board of a public body should There are strong connectionspublic bodies but only when powers work under full transparency: (i) between the themes of clarity are limited, and there is strong Publication of agenda papers atleastaccountability for a clear objective. one week before the board meeting; of objective, accountability (ii) Live streaming video from the mechanisms, operational flexibilityone objective is present, it is important board meeting; (iii) Publication ofto confirm that the objectives and the minutes of the board meeting and independence. All fouraccountability of the organization are immediately after the meeting. elements should be seen as aclearly established. package deal. It is only safe to The application of these four give operational flexibility andApply good governance principles to rules in a public body will yield independence to the leadership ofthe working of public bodies superior thinking and decision a public body which has clarity of making of a kind that is hard to induce objectives and ample accountability In the private sector, we know within a government department. mechanisms; otherwise the powerthe three key principles of sound This is one reason why contracting-governance. First, all power should out of well specified problems to will be abused.vest with the board. The board should public bodies (or private firms, by anot be a show-piece: All important department of government is always are controlled, and the accountabilitydecisions should take place at the superior to performing those tasks mechanisms are adequate, there needboard. Shareholders should not meddle internally. be no restrictions upon operationalin the working of the organization other flexibility. As an example, a privatethan through the appointment process High operational flexibility and high firm in a competitive market is heldof the board, and the working of the independence for public bodies accountable by the clear objective ofboard. Second, the board should have obtaining prods. In this environment,a majority of independent directors, to Public bodies in India have low extreme operational autonomy isprevent excessive influence of insiders, operational flexibility with restrictions appropriate.who have an incentive to be lazy and upon the human resource process,cover up mistakes. Third, the board methods of contracting and financial There are strong connectionsshould work in an adversarial way, with rules. They also have low independence between the themes of clarity ofrepeated recourse to formal voting in in the sense of being subject to back- objective, accountability mechanisms,resolving confliicts. seat driving by Ministries. operational flexibility and independence. All four elements Under present conditions, the case should be seen as a package deal. for operational flexibility of public bodies is a controversial issue. On one hand, the leadership of public bodiesYOJANA June 2014 21

It is only safe to give operational features should be seen as a package The present structures of the Indianflexibility and independence to the deal. Independence and operational State are a palimpsest of a colonialleadership of a public body which flexibility are an essential feature memory overlaid by a socialisthas clarity of objectives and ample of performance by public bodies but objective overlaid by the pressuresaccountability mechanisms; otherwise only when powers are limited, and of participatory democracy in athe power will be abused. Conversely, there is strong accountability for a market economy. In order to constructit is only when there is operational clear objective. State capacity, it is important to takeflexibility and independence that the three steps back from the presentleadership can be held accountable, Principles pertaining to use of arrangement and apply eight principlesotherwise the leadership will have private Agents as discussed in the article.plausible deniability in explainingaway failure. When feasible, private Agents are The application of these best principles will focus on the work In Section 4.1, it was argued that of departments and ministries ofthe Ministry must identify all sub- As a general principle, when the government upon political objectivesproblems where contracting-out is Agent can be a private firm, this is and upon legislation. Departmentsfeasible, and keep within itself all always better than having a public would identify sub-problems thatthe messy problems which cannot be body as the Agent, as the problem can be contracted out, either to acontracted out. The Ministry will thus of public administration ends once a public body or to a private firm.be the arena of diffused accountability. high quality contract is arrived at. A The focus would be on drafting highThe working of government complex contract is required which quality legal instruments, eitherdepartments hence requires elaborate gives revenues to the firm in a way that executive orders (for creation of non-rules that constrain recruitment, is sensitive to its performance .Apart statutory public bodies) or laws (forcompensation, power to contract, from that, there is no complexity in creation of statutory public bodies)procurement procedures, etc. the internal management of the firm. or contracts (with private firms). On the other hand, when the Agent is Once this contracting-out is done, When public bodies are established a public body, the problems of public the Agent would have considerablethrough the above seven principles, administration have shifted but not flexibility in pursuing well specifiedthe environment is quite different. been solved. technical (not political) objectives,The public body has clear objectives. and be held accountable for deliveringIt has a board that is dominated For certain problems the Agent can outcomes.by independent experts; decisions only be a public bodyare not captured by insiders. All Referencesimportant decisions are made by the When the Agent has to beboard under conditions of extreme empowered to use the coercive Burman, A., Shah, A., Rajagopal, A.,transparency. Most important, the power of the State (e.g. financial 21 April 2014. Capital controls against FDIclarity of objectives generates regulation) it is difficult to place in aviation: An example of bad governanceaccountability which prods the board this in a private firm. When this in India. Ajay Shah’s blog. URL http://forward towards performance. is done (e.g. with exchanges that ajayshahblog.blogspot.in/2014/04/ capital- perform regulation and supervision controls-against-fdi-in-retail.html Under these conditions, there is roles), it needs to be accompanieda case for much greater operational by strictures on the ownership and Kapur, D., Mehta, P. B., January 2006.flexibility for public bodies on governance of the Agent.Another The Indian Parliament as an institution ofmatters of human resource policies, example is a contracting function such accountability. Democracy, Governancecontracting, financial rules, etc. If as that performed by NHAI. It is hard and Human Rights Programmea HR policy document is debated to design an incentive-compatibleand approved by the board, under contract through which the contracting Paper 23, United Nations Researchconditions of full transparency, this function can be placed upon a private Institute for Social Development. Pritchett,is likely to be an HR policy document Agent. L., May 2009. Is India a ailing state?that is well suited to the ground Detours on the four lane highway torealities faced by the organization in When the Agent is only required modernisation. Tech. rep., Kennedy Schoolfulfilling its objectives. to perform certain service functions of Government, Harvard University. (e.g. operating a road, distributing High performing public bodies electricity, teaching in a classroom), Srikrishna, B. N., March 2013.are those which feature a blend of where coercion is not required, andhigh clarity of purpose, precise and the outcome is easily measured, the Report of the Financial Sector Legislativelimited powers, high accountability Agent can generally be a privatemechanisms, high independence and firm. Reforms Commission, volume 1high operational flexibility. These Conclusion and 2. Commission report, Department The defining problem in India is of Economic Aairs, Ministry of that of constructing State capacity. Finance.  q (E-mail : [email protected])22 YOJANA June 2014

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trade policies internationalDeveloping countries, Agriculture and the WorldTrade Organization J P Singh I nternational agricultural exports grew by 10 per trade remains robust cent annually in the 2005-12 period despite the slow-down (WTO 2013: 60-61). India is the in the global economy eighth biggest exporter of agricultural since the 2008 products, including the United States and the European Union. The annual financial crisis. Global per cent age rate increase in India’s agricultural exports was 22 per cent merchandise exports in 2012 were and India accounted for 2.6 per cent of total world agricultural exports $17.3 trillion and the developing in 2012. Agriculture is not only an important export commodity but also world accounted for 42 per cent of one growing alongside India’s well- known comparative advantage in these exports. Exports outstripped services exports. ...these new issues must production: world Merchandise exports Agricultural exports offer unique be reckoned against opportunities to developing countries, the growing share of grew by 3.5 per cent annually in including India, but they also pose important challenges in balancing the developing world in the 2005-12 period, while world domestic and international priorities and international trade both in pressures. Three are discussed below. traditional merchandise, merchandise production grew by 2.0 First, there are challenges to prioritizing agriculture in increasingly diversified such as agricultural in the same period. India fared even domestic economies. Second, the products, but also in high- essay turns to the difficult domestictechnology driven services. better: total merchandise exports grew political economy of agricultural tradeIn such cases, the developed policy, keeping in mind the role of world can neither exclude 10.5 per cent annually in the 2005-12 participation and consultation among diverse stakeholders. Third, the essay nor be preachy towards period although the year 2012 did discusses the political economy of global the developing world. The challenges including international number of positive options register a negative growth of -0.5 per negotiations and developed countryfor the developing world to protectionism. Countries like Indiaparticipate effectively in the cent . must strike a careful balance between international trade system being services versus agricultural High technology and services are continues to increase often regarded as growth drivers for the global economy. Nevertheless, ‘down-stream’ commodities such as agriculture products and clothing continue to be salient in their own right, and may even benefit from revolutions in technology. Agriculture benefits from provision of infrastructural services such as transportation and banking, and clothing industry is revolutionized with computer aided design and manufacturing. Agriculture made up 9.2 per cent of global merchandise exports in 2012 andThe author is Professor of Global Affairs and Cultural Studies, and Distinguished Senior Fellow at the School of Public Policy at GeorgeMason University, USA. He has authored a number of books and scholarly articles on global political economy focusing on issues ofglobal governance and development, cultural economics, socio-economic impact of information technologies, and global diplomacyand deliberations. Professor Singh has also advised international organizations such as UNESCO, the World Bank and the World TradeOrganization.24 YOJANA June 2014

Table 1 The agricultural profile of the developing world was thus checkered Growth in the Volume of Merchandise Exports and with either falling terms of trade or Production, 2005-2012 dependent upon preferential access in the developed world. Preferential 2005-12 access, begun initially as extension of colonial commodity networks, becameWorld Merchandise Exports Agricultural Products 3.5 almost synonymous with agricultural Fuels and Mining Products 4.0 exports from the developing world.World Merchandise Production Manufactures 2.0 The current groups known as African, 4.0 Caribbean and Pacific (ACP) countriesWorld GDP Agriculture 2.0 is heavily dependent upon preferentialIndia: Growth in Exports Mining 2.0 access for its agricultural products.India: Growth in Imports Manufacturing 1.0 Over time, this guaranteed preferential 2.5 access has not allowed for production 2.0 efficiencies and diversification and 10.5 many ACP countries now often face 13.5 competition from other developing countries that want these specialSource: World Trade Organization, International Trade Statistics, 2013. Geneva. protections ended. Ecuador thus foughtPage 19 successfully against the European Union preferential access for bananasexporters, and challenging developed agricultural products, to guard against chiefly from ACP countries in theworld protectionism while addressing price decreases and ‘infant industry’ early 2000s resulting in a final victorydemand to liberalize their own markets protections to allow growth for its through dispute settlement at the WTOin agriculture. manufacturing industries. The chief in 2005. export from the developing worldEconomic Diversity, International was agricultural products but poor The current rise in agriculturalTrade and Agriculture countries often faced declining terms exports from the developing world of trade due to the price elasticity of mentioned above must be understood in The World Trade Organization and agricultural products, higher exports a slightly different context than the oldits predecessor, the General Agreement did not necessarily result in bigger trading system of preferential and duty-on Tariffs and Trade (GATT), were earnings due to falling prices. The free access. First, the top agriculturalfounded post World War II to increase economist Jagdish Bhagwati (1958) exporters from the developing worldglobal trade and make it rule-based. called this phenomenon “immiserizing include countries that have eitherNevertheless, GATT was an agreement growth” where the falling terms of trade challenged the old protectionist systemamong great powers such as the USA negatively impacted the overall growth of preferential access (such as Brazil),and UK and despite their membership, rate. Furthermore, expensive imports or countries that are now part of freeexcluded the voices of the developing drained foreign exchange reserves even trade coalitions in agriculture suchworld. as the developing world undertook as Argentina in the Cairns Group import substitution industrialization to of agriculture named after a group The historic position of the produce similar or substitute products of 19 developed and developingdeveloping world in international domestically. countries that met in Cairns, Australiatrade was to seek price supports for its in 1986. The second feature of the new agricultural profile is that many Table 2 developing countries have alreadyShare of Agricultural Products in Trade in Merchandise by Region, 2012 successfully diversified into industrial and services products, while being Exports Imports agricultural exporters.World 9.2 9.2 India’s case as a leading agricultural and services exporter is illustrative. AtNorth America 10.9 6.6 GATT’s Uruguay Round of trade talks (1986-94), India initially opposedSouth and Central America 27.4 8.6 the services liberalization agenda that the U.S. and Western EuropeEurope 10.3 10.1 proposed (Singh 2008). However, the General Agreement on Trade inCommonwealth of Independent States (CIS) 8.2 12.2Africa 9.1 16.2Middle East 2.2 12.6Asia 6.8 8.7Source: World Trade Organization, International Trade Statistics, 2013.Geneva. Page 61YOJANA June 2014 25

Table 3 rural livelihoods, rural employment, orLeading Exporters of Agricultural Products plain old protectionism. Nevertheless, higher prices would also benefit (billion dollars and per centage) developing world exports such as cotton from West Africa that cannot Value Share in World 2005-12: Annual compete with the subsidized U.S. cotton. Exports per centage Rate Trade policies for agricultureEuropean Union (27) 613 37.0 7 in the developing world followedExtra-EU (27) exports 163 9.8 10 historical patterns such as imperialUnited States 172 10.4 11 preferences for colonial era products.Brazil 86 5.2 14 Furthermore, senior bureaucrats from trade or finance ministries generallyChina 66 4.0 13 shaped other policies at the centralCanada 63 3.8 6 government level. In most parts ofIndonesia 45 2.7 18 the developing world, agriculture wasArgentina 43 2.6 12 given a second place to industry in theIndia 42 2.6 22 post-colonial era. As noted above,Thailand 42 2.5 13 industry was emphasized. ThereAustralia 38 2.3 9 was even suspicion that advice fromMalaysia 34 2.0 14 developed countries such as the U.S.Russian Federation 32 1.9 12 to emphasize agricultural productionVietnam 25 1.5 19 was designed to keep India poor (DasNew Zealand 24 1.4 9 2000: 128).Mexico 23 1.4 9Above 15 1349 81.4 Prime Minister Jawaharlal Nehru declared in 1957: “Now India, weSource: World Trade Organization, International Trade Statistics, 2013. Geneva. are bound to be industrialized, we arePage 67 trying to be industrialized, we must be industrialized.” It was not until theServices (GATS), which emerged from between” countries like India that fall in ruling party’s support startingthe negotiations, proved beneficial possess comparative advantage in a in the late 1960s that agricultural wasto India’s services exports ranging few agricultural commodities but also reprioritized, albeit now the Greenfrom offshore services, audio-visual have huge protections in place for their Revolution helped with productivity.(films and television), tourism, to domestic agriculture.telecommunications. (Tables 4 & 5). In the current era, balance amongAs the sixth largest services exporter, Political Economy of Agriculture and industry, services, and agriculturewith 3.32 per cent share of total world Trade Policies sectors is necessary for strategizingexports in services, India seems to have trade policies. This is difficult forleapfrogged from an agricultural to a The political economy of agriculture pluralist countries such as India facingservices economy without sacrificing generally features intense lobbying pressures from various constituencies.agriculture, which continues to be and complex politics given the size or India now has comparative advantageimportant in its trade profile. entrenchment of agricultural lobbies in agricultural products such as meat, in various countries. The strength of oilseeds, rice, sugar, and tea but the In the immediate post-colonial era, the cotton or the sugar lobbies in the growth drivers also lie elsewhere inthe developing world had few export United States explains the subsidies services and industry. Striking the rightoptions and relied almost entirely on these sectors receive in successive farm balance can be hard with more thanpreferential access for its agricultural bills. Empirical analyses tend to show two-thirds of the national employmentproducts. The current era is different; that as countries become developed, in agriculture.many countries from the developing they switch from taxes on agriculturalworld now have a comparative exports to subsidizing them. The The story of consultations in Indiaadvantage in manufactured goods or welfare costs of tariffs and subsidies for agricultural trade policy beforeservices. Competitive agricultural in agriculture are substantial and the launch of the Doha Round ofexporters from the developing world estimated to be between $100 billion to trade talks at the WTO in Novembermust also be distinguished from those $300 billion per year by 2015 (World 2001 is instructive. At the conclusionthat rely heavily on preferential access Bank 2007: 103). Trade liberalization of the Uruguay Round, many state(APC), the free-trade oriented Cairns would increase agricultural prices by governments filed a protest and even agroup fighting against agricultural 5.5 per cent. Developing countries, petition in the Supreme Court arguingprotectionism in the developed and in particular, maintain the lower pricesdeveloping worlds, and the “in- for various reasons: food security,26 YOJANA June 2014

Table 4 The developing world has India: Trade in Commercial Services employed a number of negotiation tactics effectively at the WTO to Billions dollars and percentage address complex pressures and trade- offs. First, it has argued collectively Value Share Annual per through various types of coalitional centage Change strength (WTO 2014). Apart from the APC coalition mentioned earlier, 2005 2012 2005-12 coalitional pressures have come from countries like India and Brazil at theTransportations Services 17.1 1.0 1.9 17 G-20 meetings in a forum that extends beyond trade negotiations. India’sTravel 17.8 1.1 1.6 13 stance backing heavy subsidies for food security at WTO’s Bali negotiations inOther Commercial 103.8 3.1 4.4 15 December 2013 received support from coalitional groups such as the G33.Source: World Trade Organization, International Trade Statistics, 2013. Geneva. Pages 144-15 More recently, though, the Cairns group has also criticized countriesthat the central government had no however, demonstrated to trade such as India for trade distortingauthority to negotiate an agreement officials that Argentina’s comparative subsidies in agriculture, which theon agriculture as this was a state advantage was in agricultural products group argued rose from $8.2 billionsubject. Therefore, prior to the Doha such as beef exports and the country in 2001 to $37.6 billion in 2008Round the central government initiated joined the Cairns Group in 1986. (Financial Times 2014). Second,consultations among ministries and the developing world has soughtvarious levels of government and civil Involving stakeholders in trade institutional linkages and trade-offssociety. At the central government policy formulation is laborious and in international negotiations. Oftenlevel, these included the Ministry of can deepen divisions after they voice this has involved opening markets forCommerce and Industry (MOCI), their concerns. Equally, though, the services and industry for agriculturethe Ministry of Agriculture (MOA), consultations can point out unexpected but more recently, it has also involvedand the Ministry of External Affairs developments and also help to inform trade-offs within agriculture on(MEA). The central government also the participants about difficult choices particular products.executed several regional or state- that policymakers must make at thelevel consultations with politicians global level. Future of Agricultural Tradeand farmers and brought in civil Policiessociety and think-tank experts. What International Negotiations and theemerged was something startling: WTO Agricultural trade policy is nowcontrary to the prior thrust toward far more complex than developingprotectionism, these consultations also Global negotiations are often called countries merely facing immiserizingrevealed that India did not only have two-level games. Level I international growth through trade, or the subsidiesdefensive (protectionist) interests but negotiators must also negotiate and and high tariffs existing only in thealso competitive (offensive) interests keep in touch with level II domestic developed world. Agricultural trade(Priyadarshi 2005). constituencies, often through complex liberalization must be balanced against chains and relays (Putnam 1988). various needs inside and outside of An interesting example of Organizations like WTO are often the agricultural sector (Ingo and Nashstakeholder participation and balancing vilified for ignoring grassroots 2004). The era of viewing agriculturalvarious interests also comes from pressures but this could be equally trade liberalization as a universal evilArgentina. Prior to the Uruguay true of level I negotiators who are or strength may be over.Round, Argentina initially joined supposed to represent these pressures.several developing countries in seeking The last sub-section attended to level Carefully calibrated agriculturalprotections on agriculture and opening II pressures. This section turns to level trade policy from the developing worldmarkets in industry. Consultations, I negotiations entails participation and consultations at the domestic level and use of Table 5 effective negotiations tactics at the India: Rank in World Trade global level. Participation does not resolve the political fights at home but Exports Imports it allows stakeholders to glimpse the 11 difficulties politicians face and, in theMerchandise 19 7 7Excluding intra-EU trade 14 5Commercial Services 6Excluding intra-EU trade 4Source: World Trade Organization, Country Profiles: www.wto.org/statisticsYOJANA June 2014 27

best of circumstances, to suggest ways that allows tradepolicy to move forward. At the international level, the developed world will notreadily grant access to its agricultural markets. If anything,facing pressures from the developing world has made thedeveloped world turn to preferential trade agreementswhere it can either exclude the developing world (as inthe ongoing U.S.-EU Transatlantic Trade and InvestmentPartnerships) or the series of bilateral accords involving adeveloping country where it has fewer negotiation optionsagainst a developed country. Nevertheless, these new issues must be reckonedagainst the growing share of the developing world ininternational trade both in traditional merchandise, such asagricultural products, but also in high-technology drivenservices. In such cases, the developed world can neitherexclude nor be preachy towards the developing world.The number of positive options for the developing worldto participate effectively in the international trade systemcontinues to increase.References Bhagwati, Jagdish. 1958. “Immiserizing Growth: AGeometrical Note.” Review of Economic Studies. Volume 25:201-205. Das, Gurcharan. 2000. India Unbound: From Independenceto the Global Information Age. New Delhi: Penguin. Financial Times. April 11, 2014. “World Trade OrganizationTakes on Food Security Conundrum.” Ingco, Merlina D. and John D. Nash. 2004. Agricultureand the WTO: Creating a Trading System for Development.Washington, DC : The World Bank Priyadarshi, Shishir. 2005. “Decision-making Processesin India: the Case of the Agriculture Negotiations.” In PeterGallagher, Patrick Low and Andrew L. Stoler. Editors. Managingthe Challenges of WTO Participation: 45 Case Studies.Cambridge: Cambridge University Press. Putnam, Robert. 1988. “Diplomacy and Domestic Politics:the Logic of Two-Level Games.” International Organization42: 427-60. Singh, J. P. (2008). Negotiation and the Global InformationEconomy. Cambridge: Cambridge University Press. The World Bank. 2007. World Development Report 2008:Agriculture for Development. Washington, DC: The WorldBank. World Trade Organization. 2014. “Groups in the AgricultureNegotiations.” http://www.wto.org/english/tratop_e/agric_e/negoti_groups_e.htm Accessed May 12, 2014. World Trade Organization. 2013. International Trade YE-43/2014Statistics, 2013. Geneva.  q (E-mail:[email protected])28 YOJANA June 2014

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ShodhYatraChild Poet Innovates a Machine to CleanRice without HassleT “amanna aapki is him off. Inexperienced but full of Mohd. Sajid Ansari optimism, he set about making the kadar poori ho jaye, Ki rice cleaner. To save costs, he picked it until she herself saw the machine sapno ki duniya haqueeqat up used parts from a neighbourhood working. My family and neighbours ho jaye, Ho aapka scrap shop. knew I was trying something, but no muqaddar itna roshan, Ki one paid any attention till it was ready. aameen kehne se pehle har The biggest challenge was getting So everyone was excited to see it in dua kabool ho jaye.” the correct motion for separating the action,” he mentions. impurities from the rice. He chuckles Sajid (15) is a sensitive and Around this time, Sajid camecompassionate child. Seeing his mother as he recalls, “I first used four motors to know of IGNITE competitionhassled while cleaning rice every day, of 12 volts each and connected them organized by NIF. He entered and wonhe thought of making a device to help directly to 220 volts. But all the motors an award for the rice grain cleaner.her. His automatic electric machine burnt out. I realized that they were too At the award function, everyone wasseparates broken rice grains and other weak for the power supply. So next time charmed with his poetic skills. NIFphysical impurities from unbroken I used eight motors, reasoning that if facilitated development of a compactrice grains. four people cannot lift the weight, why prototype of the rice grain cleaner not use eight!” Of course, these also through a design institution. This wasAn uphill task burnt until addition of a transformer also showcased at the Innovations’ finally got the system running. Many Exhibition organized by NIF at the While getting the idea was easy, changes and trials later, the rice grain Rashtrapati Bhavan in 2012, whereputting it together was not. Sajid cleaner was ready for testing. It was a it was highly appreciated. A patentwondered what kind of machine could working model that used electricity to application (1075/KOL/2011) indo this work. He had his eureka separate physical impurities from rice. Sajid’s name has also been filed bymoment a few days later while at a It could clean up to three kilograms in NIF.flour mill. He was fascinated by the an hour. Presenting the machine to hismachine’s rhythmic motion where mother was an emotional moment for Poetry Opening Doors towheat grains fed from the top were him. “My mother just could not believe Educationground into flour that accumulated atthe bottom. Watching the ‘atta chakki’, While performing at a statehe visualized another machine where function, he recited an emotional poemrice put in from the top comes out on education. It moved the Governorcleaned from the bottom. sufficiently to secure his admission in a well-known school in the area on full “I was excited because I now knew scholarship. The poem went somethingwhat to do. But I was not sure if I could like this:make such a machine with my limitedknowledge of science,” he shares. Jab Hum Padenge, Aage Badenge,Money was also a problem. Their only Zile ka naam roshan karenge,income came from his father’s mobile School mein papa naam likha deejiye,tailoring shop, which was essentially a Bujhe hue deep ko jala deejiye,sewing machine placed on a pushcart. School mein papa naam likhaIt was just enough to support a family deejiye.that also included Sajid’s younger sisterand an elder brother who was mentally His next project is a machine thatchallenged. will make easy the otherwise tedious manual process of sifting sand used inMaking the rice cleaner construction. His father feels confident that his son will go on to do muchBut these difficulties did not put bigger things. CorrigendumIn the May issue of Yojana, on the cover page, the correct spelling of the name of the author of the special article is Bharat Ramaswami. In the article ,'CompositeDevelopment Index; An Explanatory Note' by the author, a paragraph had been left out. The article may be read in conjunction with the paragraph-“The purposeof this article is primarily expository. I served as a member of this committee and I found that a superficial familiarity was the source of much criticism. So myhope is that this note will serve as the basis for more informed critiques.\" The error is regretted.30 YOJANA June 2014

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evaluation wide-angleIndian Agriculture – A Review of Policy andPerformance C S C Sekhar I n this essay we analyze technological, economic, institutional Indian agricultural and policy factors. (For a debate on policy and its effect policy versus technology fatigue, on agricultural growth see Narayanmoorthy (2007), Behera over time. First the and Mishra (2007) Agricultural development depends on an inter-play analytical framework of all these factors. Natural factors include soils, rainfall and temperature is presented followed by a detailed among others. Technological factors include seeds, machinery, pest- account of policy evolution and protection and fertilizing technology available in the country. The third growth performance. set of factors is economic in nature. Profitability of agriculture vis-a- India managed to attain food The evolution of Indian vis other sectors influences private self-sufficiency through a agricultural policy may be analyzed investment in agriculture and similarly combination of technology- in the context of the role of agriculture relative profitability of different crops in the development process and the determines the inter-crop allocation of policy-institution framework. factors affecting agricultural growth. land and other resources. The fourth However, other functions of In the development process of a set of factors is institutions – whichagriculture, namely providing country, agriculture serves mainly is a much less-understood concept. surpluses and forward and three functions i) to provide initial Institutions include both formal backward linkages to non- surpluses for other sectors of the (created by the law or de jure) and economy ii) to provide wage goods informal (de facto) rules of the game agricultural sectors have to the industrial sector iii) to promote that determine interaction among largely remained unrealized. growth through forward linkages the economic agents. The Food (provide inputs to industrial sector) Corporation of India (FCI), which A policy reorientation to and backward linkages (use outputs carries procurement operations andincrease rural industrialization from industrial sector in agriculture). the village level moneylender who The first and the third functions provides basic credit to the farmers and skill improvement of the require a robust overall agricultural can be thought of as two examplesrural labour force is needed to growth whereas the second requires of formal and informal institutionsmove labour out of agriculture adequate food supplies. Therefore, respectively. Institutions are the main for sustained economic growth, determinants of transaction costs. and increase productivity in both overall agricultural growthagriculture. A better access of and growth in food production are The last set of factors relate to farmers to input and output indispensable. policy, which can influence almostmarkets, technology and rural Factors that affect agricultural infrastructure are needed growth can be broadly categorized into the following – natural (climatic),The author is Associate Professor at the Institute of Economic Growth, Delhi with research interests in agricultural markets, priceformation, international agricultural trade and political economy & governance. He was earlier a Fulbright-Nehru Senior Fellow at IowaState University, IA, USA and was also associated with ICRIER, Delhi. He has contributed research papers to prestigious national andinternational journals. He is also a consultant to international organizations such as UNCTAD, IFPRI and OXFAM.32 YOJANA June 2014

all the above mentioned factors. For in more equitable inter-regional farmers and supply of grain throughinstance, large investment by the state growth. Growth in public investment PDS to poor consumers. Food tradein rural public goods such as rural roads, in agriculture started slowing down was severely restricted to providerural electrification and markets will in this phase. The fourth phase starts incentives to domestic production.change economic incentives in favour with 1992 with the launch of the Many important institutions suchof agriculture by making agriculture macro-economic reforms and spans as Agricultural Prices Commissionremunerative. Liberal policy on until 2004. This was the phase when (APC) which is now known as CACP,tenancy laws will make land leasing anti-agricultural bias was reduced Food Corporation of India (FCI) andeasier and allow unviable farms to be through correction of the over-valued National Dairy Development Boardleased out. This may increase flow of exchange rate regime. There was were also established during thistechnology into agriculture. Increase also an attempt to reduce state’s role time. Large investments were alsoin agricultural R&D investment in agriculture. The decline in public made in agricultural R&D. Theseand other public spending will have investment in the earlier phase began policies were immensely successfulsimilar positive effects in promoting to affect agricultural growth adversely and by the mid- seventies India hadagricultural growth. Therefore, policy in this phase. The final phase is fromcan influence all other factors, except 2005 when state’s role in agriculture Since the major objective was tonatural factors. increased and many programs were increase food production in a short launched. span of time, efforts were mainlyIndian Agriculture in the Last SixDecades In the first phase (1951-1965), focussed on the high potential the planning was mainly marked by regions in the irrigated pockets The evolution of agricultural industrial growth-led development of the country. Inputs such aspolicy in India can be broadly strategy. In the first three five irrigation, fertilizer, power andcategorized into five phases. The year plans, industry was the main credit were subsidized. Provisionfirst phase is from 1951 to 1965 when plank of planning and agriculture of output support in the form received little attention. Promoting of minimum support price (MSP) Promoting industrial growth industrial growth through import was started. Also, procurement through import substitution and substitution and protection through by the public agencies was begun protection through over-valued over-valued exchange rates was the exchange rates was the broad broad strategy. Food requirements to ensure assured market to during this phase were largely met the farmers and supply of grain strategy. Food requirements through PL-480 imports from the through PDS to poor consumers.during this phase were largely met USA. Some investments were made in through PL-480 imports from the agricultural infrastructure, irrigation become virtually self-sufficient inUSA. Some investments were made and electricity. The major source of the production of food grains and agricultural growth during this period impressive gains had been made in in agricultural infrastructure, was area increase without notable the production of milk and sugar. The irrigation and electricity. The productivity gains. major source of growth during this major source of agricultural period was increase in productivity. growth during this period was During the second phase (1966- area increase without notable 1980), with major food shortages This supply-demand-institutional in the 1960’s and the subsequent framework, built during mid 60s, productivity gains. disruption in food aid supplies under continued till early 1990s with minor the PL-480 programme of the United changes. Results of this policy regimethe main emphasis was on industry States, food self-sufficiency evolved are mixed. The supply side policieswith limited focus on agriculture. as a major goal of policy planning. have resulted in decent agriculturalThe second phase (1966-1981) was Since the major objective was to growth and helped India achievethe phase when green revolution increase food production in a short food self-sufficiency (Table 1). But,technology or HYV technology was span of time, efforts were mainly the focus on well-endowed regionsintroduced and adopted in a major focussed on the high potential regions resulted in inter-regional disparities inway in the country. India attained in the irrigated pockets of the country. growth. Policies on the consumptionfood self-sufficiency during this phase Inputs such as irrigation, fertilizer, front – buffer stocks and PDS –through a combination of technology, power and credit were subsidized. ensured a steady supply of food atappropriate policy framework and Provision of output support in the affordable prices to large sections ofsuitable institutions. The third phase form of minimum support price population. The biggest achievementcovers the period from 1981 to 1991 (MSP) was started. Also, procurement of these policies can be said to be thewhen the green revolution technology by the public agencies was begunspread throughout the country resulting to ensure assured market to theYOJANA June 2014 33

complete elimination of large-scale improvement in the terms of trade crisis by the late-1990s (see Chandfamines due to natural (droughts) (ToT) for agriculture. The index et al. 2007). The average growth rateor man-made (failure of distribution of terms of trade (1990-91=100) of agriculture during the pre-greennetwork) causes. remained above 100 during the entire revolution period (phase 1) was 2.1 per period since 1990 (Agricultural cent , which accelerated to 3 per cent The third phase (1981-1991) Statistics at a Glance, 2011). As a and 3.5 per cent respectively in thesaw the spread of HYV technology result of this improvement in the ToT next two phases. However, the growthto regions other than north-west private sector gross capital formation rate fell drastically to 2.2 per centIndia. This period is the best phase in agriculture (GCFA) increased from during 1997-2004, which was almostof Indian agriculture as growth was 11424 crores in 1990-91 (1993-94 equal to the pre-green revolution phase.achieved with inter-regional equity. prices) to 14931 crores in 2000- Ironically this was the period whenWith self-sufficiency in food grains, 01. The rate of growth in 90s (2.5 non-agricultural GDP was growingfocus shifted in this phase to oilseeds per cent) was also higher than in at 7 per cent per annum, leading toand pulses in which growth had the 80s (2.0 per cent). While the large inter-sectoral disparities. Thislagged behind. Technology Mission improvement in ToT, had a slight slowdown in agriculture was mainlyin Oilseeds and Pulses (TMOP) was positive effect on private investment because of sharp deceleration/declinestarted in 1986. These policy initiatives in agriculture, rising fiscal deficits, in public investment and input usageresulted in very impressive increase on the other hand, contributed to a in agriculture, which is linked toin production of oilseeds. However, decline in public investment. The decline in profitability of most crops.the costs of this increase were quite public investment of 7130 crores in The complementarity between publicsubstantial in terms of resource use 1981-82 fell to 4992 crores in 1990- investment and private investment asinefficiency as indicated by resource 91 and further to rupees 4520 crores well as input usage, led to this severecost ratios much in excess of 1 for in 2000-01. As a result, development crisis in agriculture.major oilseeds. Production of food of infrastructure like irrigation,grains continued to rise and control of rural electrification, rural roads What can be said about the successfood trade and operation of the public and markets suffered. This decline of India’s agricultural policies uptodistribution system continued during showed very adverse effect on the this point? India’s performance overallthis period. performance of agriculture in the was undoubtedly impressive. Food country in the 1990s. The average grain production increased manifold The fourth phase (1992-2004) is growth rate of agricultural GDP fell and the country turned from being amarked by the launching of macro to 3.1 per cent in the 1990’s (1991-92 net importer in 1951 to a net exportereconomic reforms in 1991 and import to 2001-02) as compared to 3.5 per in 2013. Irrigation increased fromliberalization in edible oils sector cent during the 1980s (Table 1). The 11 per cent (of net sown area) toin 1994. This phase can be further growth rate of production of principal 45 per cent during this period.subdivided into two sub-phases 1992 crops has come down from 3.19 per Fertiliser consumption rose fromto 1997 and 1997 to 2004. In the cent per annum during 80s to 2.28 negligible quantities to 141 kg perfirst sub-phase, the macro economic per cent in 90s. /hectare during the same period.reforms resulted in reduction of the Before mid sixties, increase in acreageanti-agricultural bias. The second This continued neglect of public was principally responsible for thesub-phase witnessed a sharp decline investment in agriculture started increase in production. After the greenin agricultural growth, as a result of manifesting in the form of a severe revolution, the increase in yield wasthe reduction in capital investmentand decline in farm profitability. Table 1The anti-agricultural bias decreasedconsiderably since the early 1990s. Average Growth Rates of Agri-GDP and GDP at Factor CostThis is mainly because of a steadydecline in the manufacturing Periods Agri-GDP S.D. GDP S.D.protection and correction of theexchange rate regime as a result 1951-52 to 1965-66 2.15 5.25 3.58 3.16of macroeconomic reforms. Thepeak tariffs on industrial products 1966-67 to 1980-81 3.03 7.59 3.66 3.88came down from 300 per cent in1991-92 to 30 per cent in 2002. 1981-82 to 1991-92 3.45 5.15 5.04 2.43Similarly, import controls werewithdrawn in 1991-92 virtually on 1992-93 to 2004-05 3.14 3.99 6.18 1.43all goods. One of the effects of thesestructural adjustment measures was 2005-06 to 2011-12 3.89 2.42 8.46 1.42 Source: Economic Survey 2012-13 Note: 1) The growth rates are averages of annual growth rates. 2) S.D. refers to standard deviation of the growth rates34 YOJANA June 2014

substantial and across the board for preparation of district agricultural The third programme is theall crops. The biggest achievement is plans has been minimal. National Food Security Act (NFSA),the virtual elimination of large-scale with the main objective of providingfamines in the country. The second major program is economic access to food. Under this aimed to increase food production by program an entitlement of 35 kg On the negative side, the subsidies the end of the 11th FYP. The National of food-grain per month per AAYon power, fertiliser and food grew Food Security Mission (NFSM) was household and 25 kg per month perrapidly. This current expenditure on launched in 2007 with the limited priority household (to be decided bysubsidies led to decline in public objective of increasing the production the state governments) at a price ofinvestment in agriculture. As a result of rice, wheat and pulses by 10, 8 and 3/2/1 for rice/wheat/millets for threethe gross capital formation by the 2 million tonnes respectively by the years have been created. In all, aboutpublic sector in agriculture declined end of the 11th FYP. The program, like 75 per cent of the rural and 50 per centsharply after 1980. Inter-regional and the green revolution period, focused of the urban population is covered.inter-sectoral disparities widened on select districts across the country Another feature of the program isover time. Farming became unviable for each crop. Results indicate that provision of other benefits such asand a severe crisis ensued from 1997. the program has managed to achieve maternal and child support, supportThe major limitation of the growth the targeted production for each of to destitute and homeless. The mainprocess is that the country could not the crops. concerns about the program relate toachieve universal economic accessto food even three decades after the Figure 1country became self-sufficient in foodproduction. Figure 2 Capital Formation in Agriculture and Agri-GDP Growth:Recent Initiatives Before and After RKVY In the last phase (2005-2013) fewefforts have been made to address 8these issues – arresting the declinein investment in agriculture, makingfarming viable and improving farmers’income, increasing food productionand providing economic access tofood to large sections of population. Rashtriya Krishi Vikas Yojana(RKVY) was started in 2007 mainlywith the objectives of incentivizingstates to increase investment inagriculture (because agriculture is astate subject) and use this investmentto address felt-needs of the farmers.To meet these two objectives, it hasbeen made mandatory for states tomaintain or increase their trend growthin expenditure on agriculture (as aproportion of total expenditure), andalso make district agricultural plans(DAP) through a bottom-up planningprocess for the entire state. Stateshave to meet both these requirementsto be able to access RKVY funds.The initial results show improvementin the growth rate of GCFA after theprogram as compared to the precedingperiod. The agri-GDP growth ratehas also been higher and more stableduring this period (Fig 1 and Fig 2).However, people’s participation inYOJANA June 2014 35

sufficiency of domestic production, state support was withdrawn to edible may be supplemented by incentivizinglevel of procurement needed, likely oil sector in the mid 1990s, growth private sector to invest more inimpact on market prices, feasibility performance slackened. There was agriculture. Although, National Foodof imports in case of production another problem during this phase Security Act is beneficial to provideshortfalls, level of subsidy outgo and related to the capture of benefits by economic access in the short-run, moreinefficiency of PDS. interest groups. The green revolution sustainable policies of improving rural regions, which benefited from the incomes through livelihood security Recent studies suggest that the initial state support in the 1960s, need to be adopted.current levels of production and continued to exert pressure on theprocurement are adequate to meet central government for continuance Referencesthe requirements of the program. of support. This resulted in decline inAlso, the subsidy outgo is also only public investment for agriculture, as Behera, Bhagirath and Pulak Mishramarginally higher. These studies also resources were diverted to subsidies (2007), “Acceleration of Agriculturalindicate an improvement in the PDS on food, fertilizer, power and Growth in India: Suggestive Policyin several states (Khera 2011a and irrigation. This crowding-out of public Framework”, Economic and Political2011b). However, the concerns about investment by the current expenditure Weekly, Vol. 42, No. 42 (Oct. 20 - 26,market prices appear valid in the light on subsidies led to gradual decline 2007), pp. 4268-4271of the persistent cereal price inflation in growth in the 1990s, eventuallyin the recent past. Also, viability of turning into a major crisis by 1997. Chand, Ramesh, S. S. Raju and L.imports is open to question, given M. Pandey (2007), “Growth Crisis inthe market structure and uncertainty The subsequent debates and Agriculture: Severity and Options atabout food availability at affordable popular discourse on the decline National and State Levels”, Economicprices in the international markets in public investment and failure to and Political Weekly, Vol. 42, No. 26 (Jun.(Sekhar 2008). This issue is very attain economic access to food, led 30 - Jul. 6, 2007), pp. 2528-2533important for large countries like to corrective actions on the policyIndia. front. Civil society and media played Narayanamoorthy, A (2007): a prominent role in this. The launch of ‘Deceleration in Agricultural Growth:Role of Policy and other Factors in RKVY, NFSM and NFSA are some Technology Fatigue or Policy Fatigue?’,Different Phases of the results of this discourse. The Economic and Political Weekly, Vol 42, attempt in these programs is to create No 25, June 23. pp.2376-2379 In the first phase (1950-1964), the necessary institutional and policyagriculture was mainly driven by framework to make agriculture viable GoI, Agricultural Statistics at a Glancethe natural factors. In the second to farmers and also to increase physical (various issues), Directorate of Economicsphase (1965-1980), breakthrough and economic access to food. and Statistics, Department of Agriculturein technology in the form of high and Cooperation, Ministry of Agriculture,yielding varieties helped the policy Conclusion Government of Indiaefforts by making the economicsfavourable to food production. The India managed to attain food self- GoI, Economic Survey (variousstate also created formal institutions sufficiency through a combination issues), Ministry of Finance, Governmentsuch as CACP, FCI and NDDB to of technology-policy-institution of Indiaimplement these policies. Therefore, framework. However, other functionsthere was a perfect blend of economic- of agriculture, namely providing Khera, Reetika (2001a), “Trendstechnological-institutional-policy surpluses and forward and backward in Diversion of Grain from the Publicfactors in this phase, which resulted linkages to non-agricultural sectors Distribution System”,  Economic andin the high growth performance have largely remained unrealized. Political Weekly, Vol 46, No. 26. Specialwitnessed. A policy reorientation to increase Article, 21 May, 2011 rural industrialization and skill In the third phase, the spread of improvement of the rural labour Khera, Reetika (2001b) “Revival ofHYV technology to other parts of force is needed to move labour out of the Public Distribution System: Evidencethe country ensured continuation of agriculture and increase productivity and Explanations”, Economic and Politicalgrowth. However, there was no new in agriculture. A better access of Weekly, Vol 46, No. 44-45, Special Article,technological breakthrough during farmers to input and output markets, November, 2011this phase. As a result, the focus technology and rural infrastructuresectors during this phase – pulses are needed. Initial results of the recent Sekhar(2008), “World Rice Crisisand edible oils – witnessed growth initiatives such as RKVY and NFSM – Issues and Options”, Economic andmainly through state support without appear satisfactory. These initiatives Political Weekly, June 28, 2008, pp. 13-17.efficiency improvements. When the q (E-mail : [email protected])36 YOJANA June 2014

YE-45/2014YOJANA June 2014 37

legal reforms Special ArticleUnderstanding Rape Law Reform Pratiksha Baxi This unprecedented moment K nown variously which normalise rape and even of mobilisation and protest Nirbhaya, Braveheart celebrate sexual violence. They or Damini, the 23-year- insisted that resisting law as rape is by far one of the most old physiotherapist culture means resisting the politics, important chapters in the who died two weeks which institutes public amnesia abouthistory of political movements after the brutal gang the voices of suffering. against rape. It is important rape in a moving bus in December since rape acquired a new 2012 inspired a mass scale Retributive Public 1: Deathcritical discursivity, no longer movement against sexual violence. Penaltyconfined to the conversations This unprecedented moment ofwithin the women’s movement mobilisation and protest is by far During the protests, we saw or amongst legal experts. one of the most important chapters the emergence of many kinds of The protestors included in the history of political movements publics. There were many speeches loud voices of dissent, which against rape. It is important since and writing against the emergence named rape as an act of rape acquired a new critical of a retributive public, where the power, not sex. As a form discursivity, no longer confined to cry for death penalty or castration of gendered and sexualised the conversations within the women’s became a vocabulary of protest. violence, rape and other movement or amongst legal experts. While the demand for death penalty isforms of sexual assault, found The protestors included loud voices a symptom of collective melancholia of dissent, which named rape as an and anger, capital punishment does powerful critique act of power, not sex. As a form of not help rape survivors. Many cases gendered and sexualised violence, of rape and murder have been met rape and other forms of sexual with capital punishment, without assault, found powerful critique. producing any effect of deterrence. This was a protest, which drew Judges are prone to mitigate the attention to the continuum of violence sentence, awarding lesser than the from the everyday forms of sexual mandatory minimum sentence. harassment to the aggravated forms Further, it is possible that far more of sexual assault. The vocabulary of women will be killed, mutilated, protest was not singular, changing burnt or terrorised after sexual assault its grounds as more voices debated if all rape cases were to attract the about what needs to change in various death penalty. sites of protests in real and virtual worlds. The protesters also critiqued The demand for death penalty rests the normalisation of “rape culture” or on the idea that rape reduces women the institutionalisation of techniques, to living corpses, assuming that rape survivors are marked permanently byThe author is an Associate Professor at the Centre for the Study of Law and Governance, Jawaharlal Nehru University, New Delhi whereshe teaches sociology of law. Her research interests include sociology of law, gender studies, judicial reform and feminist legal theory.She has also been involved in public campaigns against violence against women in India. Dr. Baxi has recently published a book entitledPublic Secrets of Law: Rape Trials in India (OUP, 2014)38 YOJANA June 2014

shame and stigma. It participates in desire to hate, maim, assault and/ castration meant for a phallocentricthe social and juridical assumption kill women. Such medicalization of and caste based response to sexualthat a raped survivor has no future, punishment would have the effect violence. For Brahmanical patriarchy,since no man would want to marry of enhancing misogynistic violence, to use Uma Chakravarti’s term, thesuch a woman. To insist on death since sexual violence is not contingent regulation of sexuality is central.penalty because women are living on being biologically male or using Caste manifests its dominance andcorpses after rape means we deny the penis as a weapon. The idea that terror by normalising sexual violencewomen who survive such violence the penis is a weapon negates the on “lower” caste women, whilethe means to live a life of dignity material and symbolic realities of assigning degrading punishmenton their own terms. This is what the sexual violence. Rapacious men use to “lower” caste men who maycall for death penalty does. Rather sexualised violence to communicate sexually assault upper caste women.than argue for death penalty, we must a message to all women and some Similarly, humiliating violence iscreate safer conditions of testimony, men—a language of communication visited upon those men and women,protesting and speaking out. violently coded in the expression who transgress caste norms to have a “teaching a lesson”. sexual relationship, live together and/ There are several ways of tracing or marry. The political unconscious the genealogies of castration as There are several ways of tracing of castration as a form of punishment a response to sexual violence, the genealogies of castration as a in a caste based patriarchy finds life which mobilises public protest. response to sexual violence, which in texts, which uphold and celebrate Perfected in Nazi concentration mobilises public protest. Perfected in a phallocentric caste order. camps, castration has historically Nazi concentration camps, castration been a fascist tool for eliminating has historically been a fascist tool for Prohibit the Two-finger Test in the Jews, gays, gypsies, mentally eliminating the Jews, gays, gypsies, Rape Cases mentally challenged, in the name of challenged, in the name of “reforming” deviant sex offenders Until the 2012-2013 protests,“reforming” deviant sex offenders amongst other unwanted and despised no government took seriously the populations. In the Nazi regime if several submissions to get rid of the amongst other unwanted and castration became the apparatus of despised populations. terror to “cure” aberrant desires, it In India, the forgotten memories also offered an occasion for the police of forcible sterilisation duringRetributive public 2: Castration to label many more men as “aberrant”, the Emergency haunt any call for to castrate them—creating a reign of forced castration. Emma Tarlo’s, Castration acquired a retributive sexual terror. Unsettling Memories: Narrativescurrency not witnessed in earlier of the Emergency in Delhi critiquesprotests against sexual assault. In India, the forgotten memories such states of emergencies, whichHow do we trace the emergence of of forcible sterilisation during destroy the reproductive futurescastration as an alternative to death the Emergency haunt any call for of unwanted populations, creatingpenalty or life sentence without forced castration. Emma Tarlo’s, in its wake terrible legacy ofparole or remission? State response Unsettling Memories: Narratives of the state’s monopoly over theto protests against sexual violence the Emergency in Delhi critiques such reproductive and sexed body.recommending forcible castration, states of emergencies, which destroywhether physical or chemical, the reproductive futures of unwanted colonial, sexist and violent practicealthough each form produces different populations, creating in its wake of the two-finger test. Doctorskinds of desiring and brutalised terrible legacy of the state’s monopoly routinely perform this test on thebodies, is regressive for a number over the reproductive and sexed body. rape victim to figure out whetherof reasons. It is regressive since The political unconscious that raises the hymen is distensible or not.this form of punishment amounts the demand for castration in relation to This then leads to the inference thatto cruel and degrading treatment sexual offenders represses, as Sophy the rape survivor is habituated toof incarcerated bodies, amounting Joseph reminds us of yet another sex, introducing past sexual historyto torture, as per international and genealogy by pointing out that texts into rape trials. Past sexual historyconstitutional law. Further, such such as the Manusmriti prescribed was disallowed in rape trials sinceforms of punishment legitimate castration as a tool of humiliation 2003. However, the two-finger testmutilation of body parts by non-state and punishment of dalit men for by medicalizing consent allows pastactors, as a technique of punishment sex with, or rape of an upper caste sexual history of the raped survivorand terror. Most importantly, forcible woman. If we trace the genealogy of to prejudice her testimony.castration does not displace the the debate on castration to these texts, we find a clear articulation of whatYOJANA June 2014 39

The Human Rights Watch report Court named the two-finger test as no longer thought of as a crime ofDignity on Trial collated judgements, unconstitutional, the government property (women being the sexualmedical opinions and interviews did not ban it until March 2014. The property of their men)? To an extentwith experts to recommend to the national protocol now adopted by but not entirely : marital rape was notgovernment that the two-finger test the Central government however criminalised. Hence, rape of wivesshould be scrapped in 2010. There is will have to be adopted by the State above the age of 15 is not a crime.no scientific basis to this test, since no governments. The 2013 amendment recogniseddoctor can determine whether or not that rape of a separated wife is nota woman has a sexual history, unless The Criminal Law Amendment limited to a situation where the wifeshe chooses to narrate her sexual Act, 2013 is separated by juridical decree, asbiography. The two-finger test finds in the 1983 amendment. In otherrepetition in every other medico- Crafted in the background of a words, the rape law is not applicablelegal textbook. These textbooks are sharp critique of the Ordinance, the to wives older than 15, althoughused in courtrooms to discredit the public cry for death penalty and the the child sexual assault law passedsurvivor: “oh, she is habituated, she unfolding trial of the Delhi gang in 2012 (POCSO) is applicable tois lying about rape”: is a common rape accused, the Criminal Law child wives between 15-18. The agerefrain in trial courts. In 2013, the Amendment Act of 2013 abandoned of consent was raised to 18—thisSupreme Court held that ‘medical its commitment to making rape a means that consensual sex between gender-neutral offence. The Verma young adults between the age of 16 Crafted in the background of a committee recommendations to make and 18 is now statutory rape. Thissharp critique of the Ordinance, the the category of the survivor gender raises concern about the use of thepublic cry for death penalty and the neutral were rejected in favour of rape law to regulate consensual sex gender specificity of both survivors and relationships of love, which unfolding trial of the Delhi gang and perpetrators. This meant that transgress caste and community rape accused, the Criminal Law violence against adult men and sexual norms.Amendment Act of 2013 abandoned minorities is not addressed in law. its commitment to making rape a And later, the Supreme Court was The definition of rape wasgender-neutral offence. The Verma to overturn the Delhi High Court expanded to include other forms committee recommendations to judgement in Koushal vs Naz dealing of non-penile penetrative sex in make the category of the survivor a body blow to the jurisprudence of any body orifice without consent or gender neutral were rejected in dignity. against will—a radical departurefavour of gender specificity of both from the 1983 amendment. The The definition of rape was definition of consent was enlarged survivors and perpetrators. expanded to include other forms of non-penile penetrative sex in any and it was specified that lackprocedures should not be carried out body orifice without consent or of marks of resistance does notin a manner that constitutes cruel, against will—a radical departureinhuman, or degrading treatment from the 1983 amendment. The amount to consent.and health should be of paramount definition of consent was enlargedconsideration while dealing with and it was specified that lack of In 2013, newer categoriesgender-based violence. The State marks of resistance does not amount of aggravated rape have beenis under an obligation to make such to consent. The 2013 amendment introduced. These include: rape byservices available to survivors of now specifies that ‘consent means a relative, guardian, or teacher of,sexual violence. Proper measures an unequivocal voluntary agreement or a person in a position of trustshould be taken to ensure their safety when the woman by words, gestures or authority [s. 376 (2) (f)], rapeand there should be no arbitrary or any form of verbal or non-verbal of a woman during communal oror unlawful interference with his communication, communicates sectarian violence [s. 376 (2) (g)],privacy. Thus, in view of the above, willingness to participate in the rape of a woman incapable of givingundoubtedly, the two finger test and specific sexual act’, ‘provided that consent [s. 376 (2) (j)], rape of aits interpretation violates the right of a woman who does not physically woman when the accused is in arape survivors to privacy, physical resist to the act of penetration shall position of domination and controland mental integrity and dignity. not by the reason only of that fact, over her [s. 376 (2) (k)], when aThus, this test, even if the report is be regarded as consenting to the woman suffers from a physical oraffirmative, cannot ipso facto, be sexual activity’. This is a significant mental disability [s. 376 (2) (l)],given (sic) rise to presumption of amendment. when grievous bodily harm is causedconsent’.1 Although the Supreme or the woman is maimed, disfigured Does this mean that rape (sexual or her life is endangered [s. 376 (2) assault is not a juridical category) is40 YOJANA June 2014

(m)], or she is raped repeatedly [s. cover the victim’s medical expenses of the victim to prove consent or the376 (2) (n)]. Further, the amendment and must be paid directly to the quality of consent.defines as an aggravated offence, victim. Section 376 E specifies thatrape of children until the age of 16 punishment for repeat offenders Until 2013, disability did not[s. 376 (2) (i)], as compared to the will warrant the life sentence for the feature as a ground for amendingearlier 12 years. Section 376 (2) (c) remainder of the person’s natural life laws of procedure and evidence. Themakes it an aggravated offence if or the death penalty. 2013 Amendment inserted Sectionany member of the army forces in 54 A CrPC to specify that in case ofan area deployed by the Central or Forms of terrifying and mutilating a person identifying the accused isState government commits rape on a sexual violence, which have been mentally or physically disabled, thewoman in such area. Section 376 (2) paradigmatic to the experiences of process of identification will take(a) further holds that rape by police dalit and tribal women, seemed to place under the supervision of theofficers as an aggravated offence have become the norm, and therefore, Judicial Magistrate using methods theby specifying that such a rape will became one of the grounds for such witness is comfortable with. Further,be considered aggravated when widespread protest in 2012-13. Section 154 which now holds that thethe crime is committed, within the However, the complex experiences first information given by a womanlimits of a police station to which of prosecuting rape and atrocity in rape cases should be recorded did not inform the debate on law by a woman police officer or anyForms of terrifying and mutilating reform. Those ritualized forms of woman officer, specifies that if the sexual violence, which have been sexualized humiliation such as victim is temporarily or permanently paradigmatic to the experiences stripping and parading were not mentally or physically disabled thenof dalit and tribal women, seemed recognized as specific forms of such information shall be recorded to have become the norm, and historic wrong. Rather, following the by a police officer at the residence Verma Committee Report, Section of the complainant or any other place therefore, became one of the 354 B was inserted in the IPC which grounds for such widespread criminalized assault or use of force Until 2013, disability did not protest in 2012-13. However, the to compel any woman to be naked or feature as a ground for amendingcomplex experiences of prosecuting disrobe her for a minimum sentence laws of procedure and evidence. Therape and atrocity did not inform the of three years and a maximum 2013 Amendment inserted Section sentence of seven years. This new 54 A CrPC to specify that in case of debate on law reform. section however does not redress a person identifying the accused is the specificity of the humiliation of mentally or physically disabled, thethe policeman has been appointed being stripped and paraded in front process of identification will takeor in the premises of any station of a public, which consumes such place under the supervision of thehouse or when the woman is in a degrading spectacle. Nor were Judicial Magistrate using methodscustody of such a police officer further amendments to strengthen the witness is comfortable with.or his subordinate. The minimum the prosecution of rape of dalit orpunishment for these offences is ten tribal women under the PoA Act convenient to the complainant in theyears and the maximum extends to recommended during this time. presence of an interpreter or speciallife imprisonment, where life means educator.till the remainder of the convict’s In 2013, Section 53 A wasnatural life. A new section 376 A inserted in the Indian Evidence Act Concluding Remarkswas added which held that when which states that the evidence of therape causes death or the rape victim character of the victim or of such The amended law was, however,is reduced to a persistent vegetative person’s previous sexual experience unable to address the perplexingstate then a minimum of twenty years with any person shall not be relevant question of out of court settlementsimprisonment with a maximum of on the issue of consent or its quality. and hostile witnesses. The police,life until the remainder of natural life Further, Section 146 was amended to CBI, prosecutors, defence lawyersor death may be awarded. Section substitute the previous proviso which and other agencies of the state376 D enhanced the punishment for states that under sections 376, 376A, continue to terrorize rape survivors togang rape to a minimum sentence 376B, 376C, 376D and 376E IPC “compromise” rape cases, leading toof twenty years, which may be (or attempt to commit any of these suicides, murders and acquittals.2 Theextended to life imprisonment for offences) it shall not be permissible to suicide of the 17 year old in Patialathe remainder of the person’s natural adduce evidence or to put questions in 2013 is an outcome of the terror oflife. This section specifies that the in the cross–examination of the compromise—yet there is no attemptfine imposed should be sufficient to victim as to the general immoral to investigate why women are forced character, previous sexual experienceYOJANA June 2014 41

to compromise rape cases, when the law books clearly statethat this is illegal. Although judgements only provide usfrozen pictures of the nature of questioning directed at a rapesurvivor, appellate judgements in reporting trial proceedingsreveal the pornographic structure of the rape trials. 27 yearsafter the Mathura hearings, the sexual objectification ofthe body in rape trials finds shocking elaboration in a casereported by the Rajasthan High Court in 2007. During thecross–examination in a trial court in Jaipur district, thevictim ‘was asked as to in what posture she was raped. Shewas made to lie on the bench available in the trial Court todemonstrate her posture’. The rhetoric of judicial reform iscunning since it accommodates critique into the structure ofthe rape trial, without displacing its nature as a sexualizedspectacle. Perhaps only a heightened intolerance for any kindof sexual violence as a social force will begin to chip away atthe monumentalization of rape cultures in India? We must seekrevolutionary transformation in every sphere to inauguratenew ethical and political meanings in our collective struggleagainst sexual violence. This means that we must source ourvocabulary of protest from languages of suffering rather thanlanguages of power.References1 Lillu @ Rajesh & Anr. v. State of Haryana MANU/SC/0369/2013 at para 12-132 See Sajina T. v. State of Kerala and Ors. MANU/KE/0041/2008, Vijay Sood v. State of Himachal Pradesh MANU/HP/0132/2009.  q (E-mail:[email protected])North east diary National Highways in AssamThe Government of India has declared six roads in the state of Assam as National Highways through a notification carried out by the Ministry ofRoad Transport and Highways. With this, Assam has now 3,600 kilometres ofroads as National Highway with its total length increasing from 3,100kms to3,600 kilometres. The 244 kilometre long Highway starts from its junction atNH 27 near Nelle (Amsoi Gate). It links Rajagaon, Doyangmukh, Umrangso,Khobak ending at NH 27 at Harangajao. It would provide an alternative roadto Barak Valley. This highway has been declared as NH No. 627. Similarly, the 85 kilometre long stretch starting from the junction atNH 27 near Howli links Barpeta, Hajo stopping at NH 27 near Jalukbari.This will be the new National Highway No. 427. A stretch of 52 kilometerstarting from Manja linking Diphu and terminating near Lumding is nowNational Highway No.329. A 65 kilometer long road with its junction nearBilasipara will link Kokrajhar. It will halt at Garubhasa. It will be the newNational Highway No. 117A. The stretch of road starting at NH 27 near Nakhola connecting Jagiroad,Morigaon, Kaupati Rowta, Udalguri, Khoirabari and terminating at the borderof India and Bhutan is now declared as National Highway No. 715A. ThisHighway will also have a bridge that will connect the two banks of riverBrahmaputra. Presently, this Highway is 21 kilometre long and the remainingpart is yet to be constructed. The 42 kilometre long Highway starting from NH YE-42/201427 near Barama passing through Baksa, Subhankhata and ending at IndiaBhutan border is now the National Highway No.127E. All six highways willbe constructed and maintained by the Central Government. q42 YOJANA June 2014

YE-41/2014YOJANA June 2014 43

new paradigm social-welfareDeconstructing Social Protection Anurag Priyadarshee S ocial protection environment, they are increasingly or social security has realizing that availability of social become a buzzword protection measures may help in among policymakers, reducing the severity of the poverty particularly in low- situation to a large extent. income countries, What Is Social Protection? engaged in designing Social protection is generally described to include public actions taken measures to reduce poverty. Justification in response to levels of vulnerability, risk and deprivation, which are deemed of social protection is often premised socially unacceptable within a given society. Such actions also include on the argument that it may not be interventions and initiatives that enhance the social status and rights possible to address the structural of the marginalised. Basic idea of social protection is to use social causes of poverty within the prevalent means to prevent deprivation, and vulnerability to deprivation. Social ..social protection political and economic environment Protection thus, has a strong poverty programmes have the focus. Social protection evolved in potential to alleviate of many low-income countries. Most the late 1980s and early 1990s as a suffering of a large comprehensive set of programmes population in poorer important structural causes of poverty to respond to multidimensionalitycountries in the shorter run, of poverty. Such a response also while also contributing to are associated with unequal distribution reflected an increasing recognitionoverall human development of the perceived inadequacy of social in the longer run. The of factors of production, mainly, land safety nets, which were criticised as ‘residualist and paternalistic’ (Sabates- current challenge, and capital. Such unequal distribution Wheeler and Devereux, 2008: 64). according to them is to integrate a variety of results in poor facing a limited supply Various social protection measures programmes to address are possible and need to be taken different issues associated of the factors of production making it to reduce and mitigate such risks with poverty at different and vulnerabilities at the levels levels simultaneously very difficult for them to participate in of individuals, households, and communities. Dreze and Sen (1991) the process of economic growth. Poor argue that there may be two aspects are also unable to adequately access the health and educational infrastructure due to their assetlessness, and thus most often fail to build up their capabilities. The situation is compounded due to continued social exclusion and discrimination. Although a section of advocates of social protection acknowledge the structural causes of poverty, they also argue that absence of social protection measures and safety nets for the poor and vulnerable perpetuates poverty among them. As the policymakers find it infeasible to correct the distributional aspects of poverty in the given politico-economicThe author is currently working as Chief Operating Officer at International Development Enterprises- India (IDEI). He has workedat senior management positions with Government of India as a civil servant, a UN agency, and some of the world's most prominentvoluntary organizations. He did his doctoral research at the University of Manchester, UK, that involved exploring ways and meansto expand and deepen financial markets in India, and link them up with social protection.44 YOJANA June 2014

of such measures; protection aspects regulations. Social insurance consists of their policy frameworks since thethat concern protecting the living programmes that aim to protect against early 1990s. Social protection in suchstandards and assume paramount contingencies such as maternity, old countries is therefore largely focussedimportance at the times of social and age, sickness, or unemployment. Social on poverty reduction and relieseconomic shocks such as famines, assistance programmes aim to support increasingly on transfer of incomesand promotional aspects that aim those in poverty, while labour market in conjunction with employmentto improve the general living regulations ensure basic work standards generation, creation of assets andstandards and address deprivation and and minimum wages for work etc. provision of basic services.vulnerabilities. The objectives of one (Barientos and Hulme, 2008).aspect may be very different from those Formal sector employment declinedof the other but the implementation According to Munro (2008), in most low-income countries as astrategies involving them may not justification of social protection result of structural adjustment policies.be completely independent of each policies derives traditionally from Such policies also resulted in decreaseother. Moreover, the achievements three different discourses. The risks of wages in both public and privatein respect of one may feed into the and market failures discourse provides sectors. Thus, the contributory base wasother . For example, success with the reasons of failures in insurance markets eroded for the statutory social insurancepromotional aspects may ease the often due to informational issues, schemes. Structural adjustment policiesimplementation of protection aspects along with the failures in credit,(for example, higher incomes may human capital and labour markets to ...the overarching role and purposemake individual insurance less painful). justify provision of social protection. of social protection may be toSabates-Wheeler and Devereux The rights-based discourse advocates reduce social risk and market(2008: 69) extend such classification for social protection to fulfill the failures, satisfaction of basicto include the social protection obligations to grant legally enforceable needs, or contribute to human social and economic rights to its citizens development through rights- ...the provision measures aim to on the part of the State. Needs-based based approach depending upon reduce and mitigate deprivation, discourse on the other hand, invokes the strategies the policy makers while the preventive measures practical and moral arguments in favour adopt. attempt to prevent the incidence of reducing and alleviating chronic of deprivation and include various poverty, and promotes employing further resulted in the massive cuts in social protection measures in achieving social budgets thus adversely affecting poverty alleviation measures. that. The constraints that the poor the government contributions towards Promotive measures focus on face may have different explanations social insurance. Such schemes wereimproving incomes and capabilities resulting in different approaches therefore not as successful in low- ‘through a range of livelihood- towards social protection as means of income countries as in industrialisedenhancing programmes targeted at addressing such constraints. Thus the countries, particularly in case of a both households and individuals’. overarching role and purpose of social large majority of workers who worked protection may be to reduce social outside the formal sectors. Theymeasures in four categories, namely, risk and market failures, satisfaction could not afford to contribute to suchprovision, preventive, promotive and of basic needs, or contribute to human schemes. In many cases, they were alsotransformative measures. According development through rights-based not inclined to contribute towards theto them, the provision measures aim approach depending upon the strategies schemes that were not designed to meetto reduce and mitigate deprivation, the policy makers adopt. For example, their specific needs. These schemeswhile the preventive measures attempt market failure discourse was largely were therefore largely limited to formalto prevent the incidence of deprivation responsible for enhanced social and sector workers. Due to this reason,and include various poverty alleviation economic roles of the State and thus the the social insurance schemes in low-measures. Promotive measures focus growth of the modern welfare state. income countries further skewed theon improving incomes and capabilities income distribution in favour of formal‘through a range of livelihood- Social Protection In Low-Income sector workers especially becauseenhancing programmes targeted at Countries of the government subsidies on suchboth households and individuals’. schemes, as corresponding subsidiesThe transformative measures target Social protection as a major were not available to informal sectorsocial injustice and various kinds of attribute of the welfare state has workers. This, in effect, results inexclusion. existed in the industrially developed transfer of resources from the informal countries in the form of social welfare sector workers to formal sector workers Social protection programmes can assistance, insurance, and employment that strengthened the privileges ofbe categorised in three broad groups generation and protection. Fallouts of especially the elite in defence andof programmes: social insurance, structural adjustment programmes, civil services. A section of scholarssocial assistance and labour market various economic crises, and effects of thus advocates for limiting the social globalisation have motivated the low- income countries too to incorporate social protection programmes withinYOJANA June 2014 45

protection privileges and expanding the widespread poverty in low-income 14). ‘Limitations of private markets insocial protection benefits. Structural countries (Barrientos and Hulme, generating good living conditions’mayadjustment programmes and influence 2008). Other aspects of social protection also render such strategies of socialof neo-liberal discourse also limited the include empowering the poor and protection based on economic growthstate’s role in providing health education strengthening their agency to reduce alone infeasible (Dreze and Sen, 1991:services that adversely affected the and alleviate their poverty (Sabates- 31). Moreover, as Platteau (1991: 163)informal sector workers and the poor. Wheeler and Devereux, 2008). points out that, ‘[w]hile market forcesRecurrent global economic crisis and and institutions may help in reducingeffects of increasing globalisation in It is now being increasingly the risk of hunger, particularly in sotrade and services further deteriorated acknowledged that poverty reduction far as they increase self-reliance bythe economic condition and bargaining policies based on strategies of economic diversifying sources of income andpower of the poor in low-income growth alone lead to skewed outcomes supply as well as market outlays, theycountries (for example, Stiglitz, 2002; across geographical and social spaces.. also open the way for new sources ofBasu, 2006). As Dreze and Sen (1991: 10) argue, vulnerability’. the issues of ‘widespread, persistent Social protection in its current form deprivation’ and the ‘fragility of Dreze and Sen (1991: 32) furtherevolved as a political and economic individual security’ in low-income cite the experience of China, Costaresponse to this situation in low-income countries cannot be adequately dealt Rica, Cuba, Chile, Jamaica and Sricountries. This explains why although with the ‘standard channels of economic growth and social progress’ alone, as is Social protection in its current Structural adjustment policies generally believed to have been the case form evolved as a political and further resulted in the with the high-income countries. They economic response to this situation contend that such a belief is misplaced in low-income countries. This massive cuts in social budgets as the general improvements in the explains why although the social thus adversely affecting the conditions of living in high-income insurance models in low-income government contributions countries have been achieved through countries generally follow the basic towards social insurance. Such various social policies and public structures of such programmes in schemes were therefore not as expenditures in the areas of education, industrialised countries, the scopesuccessful in low-income countries health, employment and food security; of social assistance programmes is as in industrialised countries, rather than through economic growth much wider in low-income countries. particularly in case of a large alone. Moreover, the Gross National In addition to protecting the majority of workers who worked Product (GNP) per head measurements poor from deprivation by helping outside the formal sectors. They of the prosperity of a nation may not them maintain a certain level of could not afford to contribute to be a true indicator of the capabilities consumption as in industrialised enjoyed by its population at large. countries, they aim to enhance their such schemes. Such measurements do not take into productive capacity by investing in account the inequalities prevailing their human capital developmentthe social insurance models in low- in the distribution of incomes andincome countries generally follow the variations of incomes over time in and in their physical assetbasic structures of such programmes individual cases. formation.in industrialised countries, the scopeof social assistance programmes is It has been observed that the Lanka to argue that it is not necessarymuch wider in low-income countries. personal needs are higher at the time to wait for high economic growth toIn addition to protecting the poor from of reduced incomes, such as when achieve substantial improvementsdeprivation by helping them maintain an earning member of a household is in the general living conditions for aa certain level of consumption as in suffering from ill health. Such income large section of the population throughindustrialised countries, they aim to fluctuations could be more efficiently appropriate public action.enhance their productive capacity dealt with if insurance and capitalby investing in their human capital markets were well functional but that is Social Protection In Indiadevelopment and in their physical usually not the case in respect of low-asset formation. They further aim to income countries. Even otherwise, high Various aspects of social protectionhelp the poor to reduce their social individual incomes may not necessarily constituted an important part ofexclusion by providing them with imply enhanced capabilities especially the agenda of the Indian Freedomaccess to basic services and enhancing in absence of other social provisions movement and the government oftheir participation in various social and such as in the areas of health and newly-independent India initiatedother institutions. Social assistance is education. This analysis thus indicates several social protection programmes.also sometimes employed to address that ‘economic growth alone cannotthe inequality issues in view of the be relied upon to deal either with the promotion or with the protection of living standards’(Dreze and Sen, 1991:46 YOJANA June 2014

Such programmes were considerably on an average in the immediately contributing towards reduction ofscaled up and new programmes were preceding ten years. More importantly, poverty and vulnerability. Povertyinitiated in the late 1960s and early such growth in employment was reduction policies based on strategies1970s in response to various natural almost entirely limited to the informal of economic growth alone lead tocalamities, droughts and food shortages sectors of economy. This did not help skewed outcomes across geographicalduring that period. Next phase of spurt the people, additionally employed and social spaces. Social protectionin social protection was witnessed in during this period, to come out of measures are therefore needed tothe later half of 1990s, when it was poverty. Real wage growth rate also deepen and widen the poverty impactsrealised that the gains from economic fell during this period. NCEUS thus of economic growth. They help thereforms and increased globalisation concludes that the substantial jump households come out of povertyof Indian economy were largely in the economic growth was not traps caused due to low incomes andbypassing a large section of the society. translated into employment generation limited opportunities. Social transfers,Various social protection programmes and enhancement of incomes for a especially the conditional transferwere therefore scaled up and new large number of Indians.Quality of programmes, promote enhancement ofprogrammes such as those guaranteed employment was also found to be human capital.under National Rural Employment adversely affected in general duringGuarantee Act and later Right to Food the period of high economic growth The constraints that the poor faceAct were launched. due to a process of informalisation may have different explanations of a section of formal sector workers, resulting in different approaches ...the claims of poverty reduction and job-cuts in government and towards social protection as means due to economic growth caused public sectors. Increased tendency to of addressing such constraints. by liberalisation of economy are outsource various types of work to largely based on the assessment contractors in the formal, including the Thus the overarching role and of benefits accrued to the section government and public, sectors also purpose of social protection may be of population possessing some contributed to this phenomenon (e.g., to reduce social risk, satisfaction means of production such as Breman 2010) Such informalisation, land, equipments or other forms associated with low wages, longer of basic needs, or contribute to of petty capital. Poor, however, working hours, and general lack of human development through lack resources and thus means of employment and social security further rights-based approach depending production, and sell their low- contributed to poverty among the upon the strategies the policy skilled or unskilled labour to earn informalised workers and deteriorated makers adopt while addressing the livelihoods. They do not gain from their living conditions.Breman (2010) aforementioned constraints. increased growth rates in the argues that the claims of poverty reduction due to economic growth There is now a general consensus economy. caused by liberalisation of economy on poverty being multidimensional and are largely based on the assessment caused mainly due to the constraints Panagariya (2008) strongly of benefits accrued to the section of the poor face while attempting tocorrelates the increase in the rate of population possessing some means of participate in, and benefit from thegrowth of Indian economy to the production such as land, equipments economic activities and opportunities.process of reform and liberalisation and or other forms of petty capital. Poor, Increased emphasis on social protectionclaims that it has also led to substantial however, lack resources and thus in low-income countries during recentreduction in poverty. Reports of the means of production, and sell their times may be seen as a response toNational Commission for Enterprises low-skilled or unskilled labour to earn such understanding of poverty. Thein the Unorganised Sector (NCEUS) livelihoods. They do not gain from constraints that the poor face mayhowever clearly show that the people increased growth rates in the economy. have different explanations resultingengaged in informal employment, According to him, high levels of in different approaches towards socialconstituting 93 per cent of India’s growth in Indian economy have greatly protection as means of addressing suchtotal workforce, are steeped in poverty benefited the upper and middle classes, constraints. Thus the overarching roleand that their deprivation has not been having means of production and/or and purpose of social protection mayreduced substantially during the period formal sector employment, while a be to reduce social risk, satisfactionfrom 1993-94 to 2004-05 associated large section of population engaged in of basic needs, or contribute towith large-scale reforms in Indian informal employment has not been able human development through rights-economy. According to such reports, to participate in the Indian economic based approach depending upon thethe employment growth rate plummeted growth process. strategies the policy makers adoptduring this period to 1.85 per cent on while addressing the aforementionedan average from over two per cent Social Protection And Poverty constraints. It is however observed that over the last decade, the focus Social protection is being of social protection programmes has increasingly recognised as an important instrument to promote social and economic development effectivelyYOJANA June 2014 47

moved from social risk and basic needs to overall human development in the developing countries. New Delhi: Oxfordperspectives towards enhancement of longer run. Moreover, as Barrientos University Press, 3-40.human capabilities. They also mention and Hulme (2008: 315) point out,that social protection has now become ‘social protection has managed to Munro, L. T., 2008. Risks, needs andone of the three main elements of avoid the ‘silver bullet’ syndrome and rights: Compatible or contradictory basesnational development strategies along naïve replications that characterised for social protection. In: A. Barrientos, andwith economic growth and human social funds and much microfinance D. Hulme, eds. Social protection for thedevelopment. The speed with which in the 1990s’. The current challenge, poor and the poorest: Concepts, policies andsocial protection programmes have according to them is to integrate a politics. Hampshire: Palgrave Macmillan.been scaled up in the low-income variety of programmes to address 27-46.countries over the last decade is different issues associated with povertyunprecedented. Barrientos and Hulme at different levels simultaneously. Panagariya, A., 2008. India: The(2008) estimate that the programmes in emerging giant. Oxford: Oxford Universityforce may have a combined capacity to References Press.reach half a billion people in poverty.They also feel that such a scale of Barrientos, A. and Hulme, D., 2008. Platteau, J. P., 1991. Traditional systemsthe programmes have the potential to Embedding social protection in the of social security and hunger insurance.significantly reduce global poverty. developing world. In: A. Barrientos and In: E. Ahmed, J. Dreze, J. Hills, and A.What makes them different from D. Hulme, eds. Social protection for the Sen, eds. Social Security in developingthe earlier poverty alleviation and poor and the poorest: Concepts, policies and countries. New Delhi: Oxford Universitydevelopment programmes is that politics. Hampshire: Palgrave Macmillan, Press, 112-170.they are focussed on the poor and the 315- 330.poorest. Sabates-Wheeler, R. and Devereux, S., Basu, K., 2006. Globalization, poverty, 2008. Transformative social protection: The The evidence suggests that social and inequality: What is the relationship? currency of social justice. In: A. Barrientos,protection programmes have the What can be done? World Development, and D. Hulme, eds. Social protection for thepotential to alleviate suffering of a 34 (8), 1361-1373. poor and the poorest: Concepts, policies andlarge population in poorer countries in politics. Hampshire: Palgrave Macmillan,the shorter run, while also contributing Dreze, J. and Sen, A., 1991. Public 64-84. action for social security: Foundations and strategy. In: E. Ahmed, J. Dreze, J. Stiglitz, J., 2002. Globalization and Hills, and A. Sen, eds. Social Security in its discontents. New York: Norton & q Company.  (E-mail: [email protected]) YE-46/201448 YOJANA June 2014