Inclusive growth in india 30 32_48

INCLUSIVE GROWTH INITIATIVES IN INDIA

Under the guidance of Dr. A.K. Sharma

Presented ByKartik Menon

Mayank DevpuraRahul Rathee

Index

Introduction Bharat Nirman Yojna NREGA(National Rural Employment

Gurantee Act) Food Security Act Right To Education Act Financial Inclusion Conclusion

Introduction Since independence, significant improvement has been

shown in India’s economic and social development. In the post-reform (since 1991) period, India has done well

in some indicators such as balance of payments, resilience to external shocks, service sector growth,

Significant accumulation of foreign exchange, Information technology (IT) and stock market, improvements in telecommunications etc.

GDP growth was around 8 to 9% per annum in the period 2004-05 to 2009-10. Investment and savings rates were quite high at 32 to 36%.

However, exclusion continued in terms of low agriculture growth, low quality employment growth, low human development, rural-urban divides, gender and social inequalities, and regional disparities etc.

Need for Inclusive growth

Earlier trend of economic growth.

Diverged across regions, leaving behind the large populous states of North Central and North East India.

Not been creating enough good jobs, that provide stable earnings for households to climb and stay out of poverty.

Growth in the agriculture sector, which employs more than half of India’s workers, had been a woeful 2%.

Left behind key sections of the population -- females, the 90 million tribal population, some SC groups religious minorities, all lagging behind in job opportunities, earnings, and human development.

Elements of Inclusive GrowthFive interrelated elements of inclusive growth.

Poverty Reduction and increase in quantity and quality of employment

Agricultural Development Social Sector Development Reduction in regional disparities Protecting the environment

Poverty and Unemployment

Problems with poverty and Unemployment:

More than 300 million below poverty line 80% of the poor are from rural areas Poverty concentrated in few states (Bihar, Uttar Pradesh and

Madhya Pradesh and Orissa, Chattisgarh and Jharkhand) Concentrated among agricultural laborers, casual workers,

Scheduled Castes and Scheduled Tribes Unemployment Rate has increased from 6% in 1994 to 10.7%

in 2010. Although no. of employment opportunities have increased over the years, the quality of employment has been a problem.

A majority of the increase in employment is in the unorganized structure. Workers in this sector do not have social security.

Agriculture

Problems in Agriculture:

Deceleration in growth from 3.5% during 1981-97 to 2% during 1997-2005. Decline in yield growth.

Land and water problems, vulnerability to world commodity prices, farmers’ suicides, 45% of farmers want to leave agriculture but no where to go.

Disparities in growth across regions and crops: growth rate declined more in rainfed areas.

Steeper decline in per capita land availability. Shrinking of farm size.

Slow reduction in share of employment (still 55%)

Social Sector Development

Problems with Social SectorDevelopment :

Slow progress Significant regional, social and gender disparities Low level and slow growth in public expenditures

particularly on health Poor quality delivery systems Privatization of Health and Education

Regional Disparities

Per capita income : Highest per capita income Rs.67,757in Haryana; lowest per capita income state Rs.13,980 in Bihar

Female infant mortality varies from 13 in Kerala to 67 in Madhya Pradesh

Female literacy varies from 33.12% in Bihar to 87.2% in Kerala

Environmental Protection

Deterrents to environmental protection:

Degradation of land, water. Increase in pollution levels Challenges of climate change Consumption patterns of rich Higher economic growth should not lead to decline in our

environment

Bharat Nirman Yojna

“Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years. Under Bharat Nirman, action is proposed in the areas of irrigation, road, rural housing, rural water supply, rural electrification and rural telecommunication connectivity. We have set specific targets to be achieved under each of these goals so that there is accountability in the progress of this initiative."

- Dr. Manmohan Singh, Prime Minister

Bharat Nirman Yojana is an action-oriented business plan for rural infrastructure of the Government of India

Launched initially for the period of 2005 -2009. It comprises projects on

1) Irrigation

2) Rural roads (Pradhan Mantri Gram Sadak Yojana)

3) Telephone Connectivity

4) Rural Electrification

5) Rural Water Supply

6) Rural housing (Indira Awaaz Yojana)

Irrigation

Bharat Nirman has set the target of creation of additional irrigation potential of 1 crore hectare under irrigation project in 4 years (2005-06 to 2008-09) through the following means;

42 lakh hectare by completing such major and medium projects

10 lakh hectare through implementation of extension, renovation and modernization of schemes along with area development and water management practices

28 lakh hectare through ground water development 10 lakh hectare by way of minor irrigation schemes using

surface flow. 10 lakh hectare by way of repair, renovation and restoration of

water bodies and extension, renovation and modernization of minor irrigation schemes.

Rural Roads

Pradhan Mantri Gram Sadak Yojana

To upgrade rural infrastructure, a commitment of Rs. 1,74,000 crores has been made to Bharat Nirman.

As part of the programme, Government of India have proposed that by end of financial year 2008 – 2009, every village of over 1000 population (or over 500 in hilly and tribal areas) will have an all-weather road.

To achieve the targets of Bharat Nirman, 1,46,185 kms. of road length was proposed to be constructed by 2009. This will benefit 66,802 unconnected eligible habitations in the country.

To ensure full farm to market connectivity, it was also proposed to upgrade 1,94,132 kms. of the existing Associated Through Routes. A sum of approximately Rs. 48,000 crore is proposed to be invested to achieve this.

Telephone Connectivity

It will be ensured that 66,822 revenue villages in the country, which have not yet been provided with a Village Public Telephone (VPT), shall be covered by November 2007.

Out of the above villages, connectivity in 14,183 remote and far-flung villages will be provided through digital satellite phone terminals.

Assistance for both capital as well as operational expenditure for these VPTs will be met out of the Universal Services Obligation Fund (USOF).

Rural Electrification

Rajiv Gandhi Grameen Vidhyutikaran Yojana

Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) has been introduced in April 2005 with aims to provide electricity in all villages and habitations in four years and provides access to electricity to all rural households.

Establish Rural Electricity Distribution Backbone (REDB) with at least a Distribution Transformer in a village or hamlet, and standalone grids with generation where grid supply is not feasible.

Subsidy towards capital expenditure to the tune of 90% was to be provided, through Rural Electrification Corporation Limited (REC),

Electrification of un-electrified Below Poverty Line (BPL) households was proposed to be financed with 100% capital subsidy @ Rs.1500/- per connection in all rural habitations.

Rural Water Supply

Bharat Nirman covers 55,067 uncovered habitations and provides additional coverage to 2.8 lakh habitations that have slipped back from full coverage.

Potable water was to be provided to 2,16,968 villages affected by poor water quality

Rural Housing

Indira Awaas Yojna

The 2001 Census places the rural housing shortage figure in India at 148 lakhs.

The Bharat Nirman Programme envisaged to construct 60 lakh houses over the next four years across the country, starting from 2005-06.

The rural housing programme is implemented by the Ministry of Rural Development through the Indira Awaas Yojana scheme, which is a centrally sponsored scheme where the cost is shared between the Centre and the States on a 75:25 basis.

Grant assistance is provided to the extent of Rs. 25,000 per house for normal areas and Rs. 27,500 for hilly areas. Funds are released to the DRDAs in two installments.

Contd….

The implementation guidelines of the scheme specifically target the rural below poverty line (BPL) households.

The selection of beneficiaries is done by the respective Gram Sabha from the BPL list and no higher approval is required.

While seeking to empower the rural women, the scheme also provides a quota for physically & mentally challenged persons, ex-servicemen, widows and freed bonded labourers.

An important requirement in the implementation is that at least 60% of the beneficiaries should belong to the SC/ST communities.

The objective of alleviating the lot of the underprivileged members of society is built into the scheme guidelines.

The IAY scheme also lays emphasis on individual sanitation and health by incorporating the cost of a sanitary latrine and smokeless chulha into the grant.

Looking ahead to the future… Provide safe drinking water to all uncovered habitations by

the end of 2012 Target of 1.2 crore additional houses for the poor by 2014 Achieve 40% teledensity by the year 2014. Ensure

broadband coverage to all 2.5 lakh panchayats and set up Bharat Nirman Seva Kendras at Panchayat level by 2012.

Connect all villages that have a population of 1000 (or 500 for hilly / tribal areas) by all weather roads by 2012.

Reach electricity to all villages and offer electricity connection to 1.75 crore poor households by 2012.

Bring additional 1 crore hectare of land under assured irrigation by the end of 2012.

MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE (NREGA) ACT

Introduction

It is the flagship programme of the Government that directly touches lives of the poor and promotes inclusive growth.

The Act aims at enhancing livelihood security of households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

Implemented by the Ministry of Rural Development. The Act came into force on February 2, 2006 and was

implemented in a phased manner. In Phase I it was introduced in 200 of the most backward

districts of the country. It was implemented in an additional 130 districts in Phase

II 2007-2008. The Act was notified in the remaining 285 rural districts of India from April 1, 2008 in Phase III.

NREGA is the first ever law internationally, that guarantees wage employment at an unprecedented scale.

Objective of the Act

The National Rural Employment Guarantee Act (NREGA) aims at enhancing the livelihood security of the people in rural areas.

This work guarantee can also serves other objectives like: --

1. Generating productive assets,

2. Protecting the environment, empowering rural women,

3. Reducing rural urban migration and fostering social equity, among others.

Key Processes of Implementation

Application for Job card

Issue of job card

Demand for employment

Work allocation

Payment of wages

Selection of works

Approval of shelf of projects

Informing village PRI

Preparation of estimatesAnd approvals

Acknowledgement ofdemand

Maintenance of muster roll

Verification

Salient Features of the Act

The Gram Panchayat after due verification will issue a Job Card.

The Job Card should be issued within 15 days of application A Job Card holder may submit a written application for

employment to the Gram Panchayat, Employment will be given within 15 days if it is not then

daily unemployment allowance as per the Act Work should ordinarily be provided within 5 km Wages are to be paid according to the Minimum Wages Act

1948 for agricultural laborers Wages are to be paid according to piece rate or daily rate.

wages should be paid through Bank / post.

8) At least one-third beneficiaries shall be women 9) Work site facilities such as crèche, drinking water, shade

have to be provided10) Shelf of projects for a village will be recommended by the

Gram Sabha 11) At least 50% of works will be allotted to Gram Panchayats for

execution12) Permissible works predominantly include water and soil

conservation, aforestation and land development works13) A 60:40 wage and material ration has to be maintained. 14) No contractors and machinery is allowed.15) Panchayat Raj Institutions [PRIs] have a principal role in

planning and implementation.

Salient Features of the Act

Major Implementing Agencies

The Gram Panchayat is the single most important agency for executing works

The other Implementing Agencies are: --

Taluka Panchayat District Level Govt. Bodies Line departments of the Government Public Sector Undertakings of the Central and State

Governments Cooperative Societies with a majority shareholding by the

Central and State Governments Self Help Groups

Funding Sources

The Central Government bears the costs on the following items:

1. The entire cost of wages of unskilled manual workers. 2. 75% of the cost of material, wages of skilled and semi-skilled

workers. 3. Administrative expenses as may be determined by the Central

Government, which will include, inter alia, the salary and the allowances of the Programme Officer and his supporting staff, work site facilities.

4. Expenses of the Central Employment Guarantee Council.

The State Government bears the costs on the following items:

1. 25% of the cost of material, wages of skilled and semi-skilled workers.

2. Unemployment allowance payable in case the State Government cannot provide wage employment on time.

3. Administrative expenses of the State Employment Guarantee Council.

Expenditure Composition

Major Outcomes of the Initiative

4.51 crore households have been provided employment and 216.32 crore person days of employment were generated.

27.75 lakh works have been undertaken, of which 46% were water conservation, 18% rural connectivity, 15% land development and 20% irrigation works on individual beneficiaries.

6.86 crore NREGA bank and post office accounts have been opened to disburse wages.

Major Outcomes of the Initiative

Major Outcomes of the Initiative

Accountability & Transparency

District Level Agency for effective grievance redressal. It will be an agency independent of the central or state government. The Agency will receive complaints from NREGA workers and others on any matters, consider such complaints and facilitate their disposal in accordance with law.

The Ministry has set up a Toll free National Helpline 1800110707 to enable the submission of complaints and queries to the Ministry for the protection of workers entitlements and rights under the Act.

Proactive Disclosure: Annual Reports on outcomes to Parliament and State legislature are mandated. Further as per the NREG Act and recent amendments, all documents and records relating to the scheme are to be make available for public scrutiny by paying a specified fee.

Accountability & Transparency

Social Audit: Section 17 of NREGA provides for social audit of all works under a Gram Panchayat by the Gram Sabha. The Gram Panchayat has to provide records for all the social audits. Social Audits enable the rural communities to monitor and analyze the quality, durability and usefulness of NREGA works as well as mobilize awareness and enforcement on their rights.

100 Eminent Citizens are being identified to monitor and report on the implementation of NREGA. Their reports and findings, to be placed on the website is expected to enable further programme improvements.

FOOD SECURITY INITIATIVES BY THE GOVERNMENT

Food Security

The Rome Declaration (1996) made during the World Food Summit states that 

“Food security is achieved when all people, at all times, havephysical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active life.”

Food Security: Plethora of Schemes

The capacity of the poor to purchase food can be ensured in two ways – by raising the incomes or supplying food grains at subsidised prices. While employment generation programmes attempt the first solution, the different schemes given below are the mechanism for the second option.

Targeted Public Distribution System (TPDS) Antodaya Anna Yojana (AAY) Integrated Child Development Scheme (ICDS) Mid Day Meal Scheme (MDMS)

Public Distribution System

PDS means distribution of essential commodities to a large number of people through a network of FPS on a recurring basis. The commodities are Wheat, Rice, Sugar & Kerosene

With a network of more than 4.62 lakh fair price shops (FPS) distributing commodities worth more than Rs 30,000 crore annually to about 160 million families, the PDS in India is perhaps the largest distribution network of its kind in the world.

All is not well with the PDS. The annual food subsidy involved in maintaining the system is huge. The level of food subsidies as a proportion of total government expenditure has gone up from a level of 2.5 percent or below in the early 1990s to more than 5 per cent today.

Has been plagued with many other charges of corruption, inefficiency, delivery of old & poor quality grains etc.

National Food Security Act

The Right to Food Act, which has been prepared by a team comprising of Prof. Jean Dreze, Harsh Mander, Biraj Patnaik, Reetika Khera and Dipa Sinha and was released on 24 June, 2009 proposes to consolidate, in law, entitlements that are currently in place through eight food and nutrition-related schemes.

All BPL households shall be entitled to 25 kg of food grains each month, at Rs 3/kg for rice and Rs 2/kg for wheat under the Public Distribution System.

Under the new Act, the government would provide 251 lakh tons of food grains for BPL and AAY categories, with subsidy amounting to Rs. 40,380 crore (if 25 kg of rice or wheat per month is supplied to each BPL household at Rs 3/- a kg).

Salient Features of the Act

A new methodology for the BPL Census is being proposed, based on simple, transparent and verifiable criteria for the Act.

The Act must include strong, in-built independent institutions for accountability along with time-bound, grievance redressal provisions.

Within the existing PDS system, the Act must provide for mandatory reforms such as de-privatisation of PDS shops, preferably to women’s groups, with sufficient capital and commissions for new owners.

Direct door step delivery of food items to the PDS shop; and computerization, along with other measures for transparency. 

The Act must create an obligation for governments to prevent and address chronic starvation, and reach food pro-actively to persons threatened with starvation.

Major Apprehensions

There are apprehensions that sustainability of Food Security law would be at peril if India faces lower agricultural production due to poor harvest, drought etc. in the future. Is India ready to rely upon food imports and food aid to ensure right to food at all cost ?

Is the Food Security Bill going to replace all such food related schemes that existed before its enactment? 

Increasing Food Subsidy Bills & burdening of the Fiscal Deficit of the country.

Corruption & Inefficiencies in the implementation of the scheme.

Low quality of food grains – A World Bank report (June 2000) states that half of FCI’s grain stocks is at least two years’ old, 30% between 2 to 4 years old, and some grain as old as 16 years.

RIGHT TO EDUCATION (RTE) ACT, 2002

Right to Education (RTE) Act

Salient features of RTE:

It also specifies Infrastructure, teaching standard, student teacher ratio and formation of school management committee.

No Capitation fees. No Screening for admission. Special training for previously not enrolled or drop out

children to enable them to be on par with others.

Apprehensions :

Inability of state governments to meet the financial requirement.

Quality norms/standards are difficult to follow in some rural areas.

Mandatory reservation of 25% seats is difficult to follow. The practice of not holding back/ liberal passing will lead

to unhealthy practices in students. Participation from parents.

FINANCIAL INCLUSION

Financial Inclusion - Definition

Rationale for Financial Inclusion

Extent of Exclusion – NSSO Survey 59th Round

Source: Rangarajan Committee report

Financial Inclusion - Scope

Financial Inclusion should include access to financial products and services like: Bank accounts . Immediate Credit. Savings products. Remittances & Payment services. Insurance – Healthcare. Mortgage. Financial advisory services.

Financial Inclusion in India- Policy Perspective

On 22 June 2006, Government of India constituted “Committee on Financial Inclusion” under the Chairmanship of Dr. C. Rangarajan.

Integrated efforts by RBI

RBI focus led to a few key developments: No-Frill accounts. Usage of Regional language. Easier Credit facilities

General purpose Credit Card (GCC) facility. Other rural intermediaries:

Non-governmental organizations, self-help groups, micro-finance institutions.

Using Information Technology.

Financial Inclusion Status

Source: Rangarajan Committee Report

A broader approach than microcredit is needed: Creating an appropriate credit delivery system is only a

necessary condition. This needs to be supplemented by efforts to improve the

productivity of small and marginal farmers and other entrepreneurs so that the credit made available can be productively employed.

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