Interview: Income support schemes for farmers are a cop-out, says economist Abhijit Sen

On January 1, when Indian news agency ANI asked Prime Minister Narendra Modi about the government’s plans to reduce agrarian distress, he said loan waivers do not work as a very small segment of farmers take loans from banks. “A majority of them take loans from money lenders,” said Modi. “When governments make such announcements, those farmers do not become beneficiaries of the waivers.”

Calling loan waivers a political stunt, the prime minister told ANI the government would empower farmers in other ways. In that context, an idea from the South Indian state of Telangana has been getting some attention. The state government gives its farmers Rs 4,000 per acre per year as income support. States like Jharkhand and Odisha have followed suit. The first has announced a Rs 5,000 per acre payment from next year. The second plans to transfer Rs 10,000. There is speculation that the Union government might follow suit.

It is easy to understand why politicians find these ideas attractive. As capital becomes global even as labour stays local, governments are increasingly unable to provide jobs for all their people. One outcome, according to economist Abhijit Sen, a former member of the erstwhile Planning Commission, is that politicians, increasingly unable to find answers, turn to interventions like regular cash payments to the citizenry.

The country needs to tread carefully on this idea. Income transfer schemes come with large questions. Where does the money come from? Given competitive politics, can these burgeon out of control? If so, what happens to developmental expenditure? What happens to a society where states collect revenues from a small handful of businesses and keep a large chunk of the population on the dole? Whom are they more answerable to?

Excerpts from an interview.

Advertisements

As MNREGA work dries up, even the elderly in Bihar are migrating to brick-kilns

In a year when large swathes of rural India reeled under drought, the Centre used WhatsApp messages to ask states to go slow on generating employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

This startling revelation emerged in the public domain in the last week of October through the reports of the Business Standard.

But for people in villages across India, the news is hardly surprising.

Why lakhs of people leave Odisha to work in distant, unsafe brick-kilns

A small railway station with shanties on either side. A main street running the length of the town, selling everything from household provisions to construction materials. A semi-finished temple, a few lodges and bars, and as the town ends, a series of truck-repair shops.

The tiny town of Kantabanji in western Odisha’s Bolangir district looks unremarkable in the summer.

But come November and it whirrs to life as people arrive from the nearby countryside after harvesting the year’s sole rainfed crop. With no work in the villages for the next few months, they come to the town with their meagre belongings to catch trains to Andhra Pradesh and Tamil Nadu, where they would spend the next five or six months working in brick-kilns.

During those weeks in November, the town becomes the largest migrant labour market in western Odisha. Its guesthouses and hotels fill up as brick kiln owners called “seths” come to recruit workers, with the help of local labour contractors called “sardars”. Two trains heading to Visakhapatnam – the Korba-VSKP Link Express and  the Durg-VSKP Passenger – extend their halts to make sure all the workers enter (or are loaded into) the unreserved compartments.

the persistence of this trade, despite the migrants knowing the harsh conditions which await them at the kilns, is perplexing. in this story, Scroll’s #eartotheground series tries to find answers.

MGNREGA ver 2.0

out today, this story on the changes planned by the nda for nrega.

Sanitation projects to reduce open defecation, increasing green cover and emphasis on creating assets form the crux of the Narendra Modi-led government’s blueprint for redeploying UPA’s flagship social sector programme — the Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA.Top officials aware of the government’s re-orientation roadmap for the rural employment guarantee scheme, being steered by rural development minister Nitin Gadkari, told ET that assessment of its outcome would go beyond number of man days of work offered to tangible ground-level changes it achieved.

For instance, people digging a pond will have to mention the storage capacity being created, its impact on groundwater level, and so on. Similarly, folks digging compost pits will have to outline the quantum of compost they will generate. According to the officials, it is proposed that about half of the scheme’s fund allocations will be earmarked for rural sanitation projects and plantation of trees along highways and rural roads.

is this a good idea? on one level, yes. rural india’s tree cover is falling. as are its groundwater levels and organic carbon in its soils. at another level, however, are these changes good for nrega?

The question is whether these problems should be fixed using MGNREGA. Corruption and payment delays have shrunk the number of people seeking work under the NREGA, said Himanshu, assistant professor in economics at JNU’s Centre for Informal Sector and Labour Studies.”MGNREGA is not a sanitation programme, but a safety net for people who can demand work whenever they need it. In the process, some assets also get created,” he told ET, adding that the Act ceases to deliver ‘work available on demand’ the moment it gets linked to another program like sanitation. “What if the money for sanitation is not released? Then NREGA, with 20% of its budget earmarked for sanitation, will suffer,” he added.

from the 2014 economic survey

Bigger public-private partnership (PPPs) in social sector programmes and a thorough overhaul of the rural employment scheme to link it with creations of assets and infrastructure relating to agriculture and tourism are on the government agenda, the Economic Survey said. The biggest challenge confronting India is “unleasing the potential of its demographic dividend’, it said. This advantage is starting to slip away. In some states, the average age of the population has already crossed 30. Kerala, for instance, has an average age of 33 years, while the corresponding number for Himachal Pradesh stands at 30.4, the survey said.

i am back from a long holiday. work resumes. first off, this quick and dirty snapshot from the economic survey on the social sector. in the story, see what nikhil dey says about the survey’s suggestion that zero-based budgeting be followed for all social sector programmes.

The biggest challenge confronting India is “unleasing the potential of its demographic dividend’, it said. This advantage is starting to slip away. In some states, the average age of the population has already cros ..

on how the upa’s development initiatives might fare under the nda

out today, a story on the possible outlook for the upa’s major development initiatives — aadhaar, cash transfers, npr, rights-based legislations, the proposed environment authority, the land acquisition bill — once the modi government takes over. 

upa1 vs upa2

and so, upa2 presented its final budget – a vote on account – yesterday. and i wrote this quick little story comparing the developmental efforts of upa1 and upa2.