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Consultations Begin on the New Industrial Policy

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Commerce and Industries Minister Suresh Prabhu set off a series of nation-wide consultations with the industry on the proposed new Industrial Policy. The first consultation was held at Guwahati on February 02. The event, organized by Department of Industrial Policy and Promotion (DIPP) in partnership with Federation of Chamber of Commerce and Industry (FICCI), was attended by more than 120 industrialists from the North East in addition to government officials from the North Eastern States.

In his speech, the Minister emphasised that this exercise is done after 25 years truly listens to and objectively equips Indian industry for the future. The prior attempts in 1956 and 1991 were formulated at a time of financial crisis.

The minister underscored how the government was coming to the industry to understand their concerns rather than the other way around. The Minister stressed the focus of the government to make business easier for the industry.

Mr Prabhu highlighted multiple initiatives of the government to reduce the burden of regulations for the industry. He also talked about the importance of centre-state cooperation and the need for change even at the district-level.

The event was also attended by Mr Chandra Mohan Patowary, Minister of Industries & Commerce, Government of Assam. In his remarks, Mr Patowary emphasized the North East region’s potential as a gateway to South East Asia.  He  highlighted the need for an  Industrial Policy for the North East

Ms Vandana Kumar, Joint Secretary DIPP, made a detailed presentation on the key highlights of the future policy. She mentioned the dual challenge of dealing with existing issues and in preparing the industry in the wake of global mega-trends such as servification, industry 4.0, responsible industrialization and rising protectionism.

The New industrial policy envisions to create a competitive Indian industry that is equipped with skill scale and technology.

Ms Kumar also highlighted some of the key ideas such as a single ID and digital platform for all G2B services across the business lifecycle, paradigm shift toward self-certification and third-party certification, plug and play infrastructure for SMEs, privatizing maintenance of industrial estates and creating a national R&D vision.

Puneet Dalmia, Chairman FICCI Manufacturing Committee stressed the need to bridge the trust deficit and further the ease of doing business. Mr Atul Chaturvedi, Additional Secretary DIPP, Dr Sanjay Baru Secretary General FICCI, Dilip Chenoy Director General of FICCI were also present.

The session concluded with a vibrant Q&A session moderated by Dr Sanjay Baru SG FICCI with the industries, who highlighted their wishes and concerns.

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Maneka Wants All Police Officers to be Re-Trained About Sexual Offences

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NEW DELHI: In a letter addressed to Chief Ministers of all the States/UTs, Smt. Maneka Sanjay Gandhi, Union Minister for Women and Child Development has outlined various steps to be taken by the States/UTs in preventing and curbing the crimes against women and children. Some of the steps mentioned in the letter are:

  1. All police officers should be re-trained on various aspects of sexual offences particularly those related to collection and preservation of evidence.
  2. Instructions may be issued to all police officers that utmost priority is to be given to complete the investigation of cases of sexual offences against children strictly as per the timelines of Law.
  3. State Governments must take strict action against those police officers who are found to be obstructing the investigation or colluding with the perpetrators of such cases.
  4. A quick and timely professional investigation is the only method in which a potential offender can be deterred but this can be done only by the states as the police department is the state subject. Forming a special cell only for sexual offences or especially for sexual offences on children would be a significant step in this regard.

The Women and Child Development Minister offered help to State Governments in establishing Forensic Laboratories in states which can be used for forensic analysis of evidence in the investigation of sexual offences.

The WCD Minister has requested the states to generate awareness among the children in using the e-box set up under POCSO with child-help line number 1098.

The Minister also highlighted that till date 175 One-stop centres for women affected by violence have been set up by the Ministry of Women and Child Development.

One Stop Centres are to help those women who have no access to either police or medical facilities or are not able to visit a police station in times of distress.

The letter also stressed that Section 21 of the POCSO Act may be invoked in all cases wherever failure to report or record is noted. Section 21 states that any officer who fails to report or record the commission of an offence under section 19/20 of the Act is liable for punishment.

The WCD Minister called for suggestions from the state Governments on dealing with the crimes against women and children.

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Can India Make a Universal Basic Income Work?

According to the Economic Survey 2016-17, universal basic income may prove to be a more effective antipoverty intervention than India’s largest welfare schemes.

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According to the Economic Survey 2016-17, universal basic income may prove to be a more effective antipoverty intervention than India’s largest welfare schemes. Discussing the Survey’s proposal, Saksham Khosla contends that while it deserves praise for bringing substantial rigour to the UBI debate, thrusting the issue into the national spotlight, and prudently concluding that the time has not yet come for implementation; its central design features offer a weak foundation for implementing UBI.

The idea of a universal basic income (UBI) – periodic and unconditional cash payments to all citizens – has gained renewed attention amid growing concerns about technological unemployment1 in advanced economies. More recently, economists have made the case for a UBI in the developing world, where cash transfers distributed to all citizens, rich and poor, may cut through layers of red tape and lead to outsized gains in poverty reduction.

In India, a rapid expansion of direct cash transfers linked to the national biometric database and small basic income experiments have galvanised an extensive debate on a UBI. Supporters claim that no-strings-attached payments will be an effective antidote to India’s underperforming antipoverty programmes and leaky, distortionary subsidies. Critics worry that they will undermine an already-fragile social security architecture, cause workers to drop out of the labour force, and encourage wasteful spending.

The Economic Survey 2016–17 provides the most exhaustive treatment thus far of implementing an Indian UBI. It finds that India’s largest welfare schemes are poorly targeted; in comparison, it argues that a UBI distributed directly into bank accounts will limit pilferage, be easier to administer, and prove a more effective antipoverty intervention.

The Economic Survey deserves praise for bringing substantial rigour to the debate, thrusting a UBI into the national spotlight, and prudently concluding that the time has not yet come for implementation. However, should future Indian policymakers wish to implement a UBI, the Survey’s central design features offer a weak foundation. If enacted upon without deeper analysis, debate, or sufficient evidence demonstrating improvement in development outcomes, the Economic Survey’s blueprint for an Indian UBI will produce underwhelming results.

The Economic Survey’s Proposal:

A UBI, according to the Economic Survey, has three key characteristics: every citizen receives cash payments, these payments are unconditional, and each individual is free to spend these funds as they wish. The Survey marshals a number of common arguments in favour of a UBI. It contends that a UBI can maximise social justice by giving each individual ownership over a share of the country’s collective wealth. The Survey asserts that cash transfers are less paternalistic than in-kind assistance and empower India’s poor to make economic decisions as they see fit. As employment growth becomes more uncertain, the Economic Survey suggests that a guaranteed basic income can help ensure that citizens enjoy a basic standard of living. Finally, by making use of the JAM2 3(Jan Dhan, Aadhaar, Mobile) trinity, a UBI would inject administrative efficiency and transparency into a welfare system “riddled with misallocation, leakages and exclusion of the poor.”

This last point forms the bedrock of the Economic Survey’s case that a UBI is a potential poverty-fighting tool that can perform significantly better than the country’s 950-odd centrally-sponsored schemes (and scores of other state-level programmes). To evaluate the targeting efficiency of India’s current welfare spending, the Survey used administrative data on public spending from 2015–16 and population data from the 2011–12 round of the National Sample Survey (NSS) to construct ‘heat maps’ of poor households in each district and the amount that each district spent on the six largest welfare schemes. The results depict the striking extent of misallocated welfare funds: districts where poverty is most prevalent – in states such as Bihar, Chhattisgarh, Madhya Pradesh, and Uttar Pradesh – tend to be given the fewest financial resources. The districts where 40% of India’s poor reside get only 29% of this total funding.

The Economic Survey argues that a UBI would be an effective antidote to these capacity limitations. A transfer from the exchequer to individual bank accounts would be a relatively light administrative burden, and one that could conceivably eliminate rent-seeking and downstream pilferage. Moreover, in a universal system, the rate of exclusion from receiving benefits would systematically decline.

Features:

• The Survey estimates that an annual transfer of Rs. 7,620 (US$120) to 75% of India’s population will push all but India’s absolute poorest above the 2011–12 Tendulkar poverty line.
• The Survey puts the cost of such a scheme at 4.9% of India’s gross domestic product (GDP). It finds that a budget-neutral transfer can only materialise after existing programmes are withdrawn. In 2014-15, India’s major fertiliser, petroleum, and food subsidies cost 2.07% of GDP, while the 10 largest central welfare schemes cost 1.38%. So-called middle-class subsidies (that primarily benefit the better-off citizens) such as those on railways, aviation fuel, gold, and electricity, add up to nearly 1.1% of GDP.
• Arguing that true universality will be politically and fiscally costly, the Survey advises paying out the grant to all but the top 25% of India’s income distribution. It suggests several ways of preventing the wealthy from availing the grant, including proxy-means tests, voluntary opt-out, community sanction, self-targeting, and targeting demographic groups.
• The Survey also noted that universal financial inclusion, in combination with the Aadhaar3 authentication system, forms a prerequisite to send transfers directly to beneficiaries’ bank accounts. A UBI can only be financed if policymakers can hammer out an expenditure-sharing formula for central and state governments.

Any meaningful analysis of the UBI proposal must grapple with several assumptions and prescriptions that compel deeper scrutiny, and others that warrant active contestation. In particular, these include the semantic oddity of a “quasi-universal basic income,” the Survey’s inconsistent treatment of the merits of targeting welfare benefits and India’s flagship anti-poverty programmes, and its limited imagination when estimating the impact of removing existing welfare schemes. Other important matters to explore are the Survey’s insufficient engagement with non-cash-based poverty interventions and its inadequate acknowledgement of the current implementation deficit of the Direct Benefit Transfer (DBT) programme. As the debates around the idea of an Indian UBI mature, these questions should be first in line for answers.

Bugs:

• The proposed transfer is less an income and more an income supplement. The Tendulkar line has been criticized for being too conservative an estimate of consumption and expenditure. The Survey’s calculations incorporate neither the loss of consumption from withdrawing major existing welfare programmes to finance a UBI, nor the transaction and transition costs of moving to a welfare system dominated by cash transfers. Taking these factors into account is likely to result in an upward revision of the transfer amount and associated fiscal burden.
• The survey is unjustified in presenting India’s largest welfare schemes as candidates for replacement. Several such programmes are intended to achieve long-term development goals and cannot be simply substituted by cash transfers. In addition, India’s national food distribution and public works programmes, which the Survey singles out for their high levels of misallocation and leakage, have improved significantly over the past decade in terms of their coverage and targeting efficiency.
• By discarding universal coverage, the survey leaves the door open for inefficient means-testing. Targeting performance can vary quite widely, and any savings generated thus can be offset by high administrative, private, social, and political costs. If targeting must be instituted, universal transfers among clearly defined vulnerable groups offer a tentative answer to this dilemma.
• An exclusive reliance on Aadhaar-linked welfare payments is short-sighted. Pilot evaluations of direct benefit transfers have found significant room for improvement in last-mile delivery, the size of the subsidy, and grievance redressal, even as authentication failures and exclusion errors due to Aadhaarpersist. Significant progress remains to be made before large-scale Aadhaar-linked transfers can be trusted to reach recipients.

Pricing Experiments:

Rather than relying exclusively upon the Survey’s proposed methods for financing, targeting, and distributing a UBI, Indian policymakers should join their Finnish and Canadian counterparts in running one or several large-scale experimental evaluations. There is much reason to believe that in India, too, a randomised control trial (RCT) of sufficient length (ideally, more than five years so as to resist electoral pressures), administered by a state government and evaluated by an independent authority, would galvanise awareness and help clarify several of the deep knowledge gaps around the implementation design and political economy of a UBI. By determining the impact on both the government (State and fiscal capacity) and citizens (economic and social outcomes), such trials can generate new empirical evidence to inform the growing UBI debate and reveal the most effective role for unconditional transfers in India’s welfare architecture.

Conclusion:

For all its acuity and painstaking effort in defining the contours of the problem, the Economic Survey’s prescription is flawed both in its proposed design and implementation. Far from what is needed to realise its ambitious vision, the Survey proposes a cash transfer with a dubious ability to compensate beneficiaries for the transition costs of moving to a new system, and one that would be financed by an indiscriminate culling of existing welfare schemes. Examining the existing literature on targeting approaches, necessitated by the survey’s emphasis on “quasi-universalism”, reveals that their impact on efficiency and cost-effectiveness can vary greatly based on administrative capacity, imperfect information, and unintended costs. The benefits of finer targeting can often be achieved at lesser cost by expanding coverage of in-kind benefits or providing uniform transfers contingent on a simple set of transparent, verifiable criteria, if not untargeted and uniform transfers. There is also the very real possibility that both national and regional politics may distort the original intent and value of a UBI into a scheme indistinguishable from India’s DBT regime, which suffers from its own implementation deficit, compounded by the unresolved concerns surrounding the Aadhaar framework.

The uncertainty about the design choices (which go beyond targeting to include the duration and frequency of transfers) and the political feasibility of a UBI emphasises the need for an Indian UBI pilot of sufficient length to test the impact of introducing regular, unconditional, universal cash transfers. A basic income trial implemented by a state administration (or several, such as the variety of municipal tests underway in the Netherlands) to accurately mimic real conditions, with an independent organisation running a large-scale experimental evaluation, would generate the hard evidence that the empirical and political discourse around an Indian UBI gravely needs before it can graduate from academic conferences and opinion pages into parliamentary debate and legislation.

It is also important to be clear-headed about the virtues of evidence. Instituting a UBI requires public support spanning demographic lines, executive backing, and strong macroeconomic fundamentals. Weaken any leg of this tripod, and the redistributive preferences of any government may shift in favour of traditional welfare support and focusing on economic growth. And even if an experiment were to yield spectacular results, the financing question is key.

If practicalities dictate that India’s tenuous social protection framework be sacrificed at the altar of a basic income, then it would turn quickly from manna from heaven to actively undermining the Indian social contract.

None of these objections forms an insurmountable obstacle toward one day implementing a clean, well-designed UBI that simultaneously empowers Indian citizens and strengthens the Indian State. Some of them may even lose their edge if India can fill the evidence gap around such policies and build administrative muscle by recasting its systems of public financial management and tax collection, with accompanying reforms to boost digital payments and financial inclusion.

In 1961, Nehru wrote to India’s chief ministers that “It is generally recognized now, even by our critics in India or abroad, that we plan well and we lay down the most excellent of principles. The difficulty comes in implementation.” Unless both the policy’s critics and supporters undertake a concerted effort to better address the above discordances, India’s UBI will meet the same fate.

This is an edited excerpt from Saksham Khosla’s recent Carnegie India report, ‘India’s Universal Basic Income: Bedeviled by the Details’, which can be read in full here.

Notes:
1. Technological unemployment is the loss of jobs caused by technological change.

2. Jan Dhan Yojana is the National Mission for Financial Inclusion to ensure access to financial services, namely banking savings and deposit accounts, remittance, credit, insurance, and pension in an affordable manner. This financial inclusion campaign was launched by Prime Minister Modi in August 2014.

3. Aadhaar is a 12-digit individual identification number issued by the Unique Identification Authority of India (UIDAI) on behalf of the Government of India. It captures the biometric identity – 10 finger prints, iris and photograph – of every resident, and serves as a proof of identity and address anywhere in India.

Disclaimer: The facts and opinions expressed in this article are strictly the personal opinions of the author. League of India does not assume any responsibility or liability for the accuracy, completeness, suitability, or validity of any information in this article.

Published with permission from Ideas For India (www.ideasforindia.in), an economics and policy portal.

Saksham Khosla

Saksham Khosla is a research analyst at Carnegie India. His research focusses on the political economy of administrative, economic, and welfare reforms in India. Previously, he was a junior fellow in the South Asia programme at the Carnegie Endowment for International Peace in Washington, DC.

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Maneka Gandhi to Ask for Death Penalty for Child Rape

Maneka Gandhi said her Women and Child Development Ministry would move a cabinet note on April 16 to amend POCSO.

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NEW DELHI: Amid nationwide grief and anger over the gang-rape and murder of an eight-year-old girl in Jammu and Kashmir’s Kathua, there is a move to change the law for sexual crimes against children to bring in the death penalty for child rape.

Women and Child Development Minister Maneka Gandhi declared it in a video message in which she said she was “deeply, deeply” disturbed by the Kathua rape case.

Maneka Gandhi said her Women and Child Development Ministry would move a cabinet note on April 16 to amend POCSO, the Protection of Children Against Sexual Offences Act.

The Union Minister was referring to the case of an eight-year-old girl in Kathua, Jammu, gang-raped in January by a group of men, including a juvenile.

WCD secretary Rakesh Srivastava said they will send a proposal seeking an amendment to the law ministry soon.

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