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The Northeast Regional Workshop on Direct Benefit Transfer

NCAER in collaboration with the DBT Mission, organized a one day  Northeast Regional Workshop on Direct Benefit Transfer in Imphal, Manipur. Apart from NCAER and the DBT Mission, the other stakeholders that participated in the workshop included the Unique Identification Authority of India, National Payments Corporation of India, Ministry of Finance, Reserve Bank of India, Department of Posts, Ministry of Telecommunications, Common Services Centre, Bill and Melinda Gates Foundation, MicroSave, and Centre for Digital Financial Inclusion, along with senior policy planners from the seven sisters and Sikkim. This workshop is part of NCAER’s ongoing study on “Implement Digital Direct Benefit Transfers: A DBT Readiness Index for the States of India”.

The main objectives of the workshop were: firstly, assess challenges in the implementation of DBT in the North-eastern region and address the respective challenges raised by various stakeholders stemming from their individual perspectives. Secondly, disseminate the concept note of NCAER on the DBT Readiness Index and the information requirements to assess the State/UT DBT Readiness Index measure. Thirdly, provide a facilitating platform to the DBT Mission and state governments in the North-eastern region (including the seven sisters and Sikkim) and other key stakeholders for DBT adoption, and address the challenges likely to arise in its implementation.

Following were the major challenges foreseen in the implementation of DBT in the North-eastern region:

  1. Lack of adequate financial infrastructure: In this context, the Government of Manipur highlighted that it has 27 development blocks with no access to any banking facility. Although have developed an integrated infrastructure to address this issue, it is imperative to ensure mobilisation of banks to augment the existing financial infrastructure. Furthermore, many states discussed the difficulties faced by them in the implementation of the Banking/Business Correspondent Model, especially due to the delicate law and order situation in the North-east.
  2. Poor penetration of Aadhaar in some states: This challenge was highlighted by the states of Assam and Manipur. They emphasised the poor penetration of Aadhaar in some of the states. The problem stems from the decision of the Registrar-General of India (RGI) to start the National Population Register (NPR), which is a digital database of residents of the country with their biometric details. However, it is hoped that with the approval of the Supreme Court, Aadhaar penetration would start increasing in the states. UIDAI suggested that schools and hospitals should serve as Aadhaar enrolment centres to enable generation of Aadhaar cards for the local residents in the North-eastern region.
  3. The states also averred that they had access to only limited guidance for proper implementation of DBT. They listed other issues that served as roadblocks in this task such as the absence of a uniform adoption structure for IT infrastructure highlighting, the need for laying down of uniform guidelines (with particular reference to the form in which they have to be stored such as Excel formats) with regard to the different databases that the states are required to hold.
  4. The states also struggle with the transition from a family-based benefit system to an individual (Aadhaar)-based benefit system and its implementation. Nonetheless, the Central Government suggested that these hurdles can be overcome if the states use databases of the NPR and the Socio-economic Caste Census of 2011 for smoothening the transition by facilitating ‘communication’ among the databases.
  5. The key concern of connectivity was also tackled during the workshop. Government officials of the Northeastern states brought to the forefront that the problem of poor connectivity can be traced to the absence of a central authority to manage telecommunications in the area. The states, therefore, requested the Ministry of Telecommunications to take the lead in ensuring better connectivity through programmes such as the one being implemented in Andhra Pradesh, wherein a consolidated package comprising Internet, TV and mobile services is provided at `149 a month.
  6. It was suggested that states are not equipped to map the shadow areas in the region and would thus require help from the Central Government in this task, though some work has been done in this sphere.
  7. Finally, it was decided that all the North-eastern states would use the Public Finance Management System (PFMS) to transfer any funds and that it is crucial to impart quick training in the use of this system as it serves as the building block for DBT.

In order to further facilitate the transfer of knowledge between the Central and state governments, NCAER, jointly with MicroSave and with support from BMGF, is undertaking a survey to assess the DBT Readiness of States. During the workshop, NCAER also outlined the need for such a survey, which would help assess the ability of states to adopt government-to-citizen (G2C) and government-to-bank (G2B) ICT-based solutions, entailing the electronic transfer of cash or delivery of in-kind goods and services based on biometric authentication.

Citing the example of Krishna district in Andhra Pradesh, NCAER emphasised that the implementation of DBT would result in significant savings by doing away with duplication and weeding out of the ghost beneficiaries. In this way, the assessment and ranking of the states, from high achievers to average achievers, through the survey would help the states in identifying the lacunae in the implementation of DBT. It was argued that even if the government enacts good policies and puts the relevant infrastructure in place, limited usage of the facility among citizens would lead to limited success of the scheme. The proposed survey will thus engender a sense of competition among the states, encouraging them to do better in the areas where improvements are needed. MicroSave also recounted some of their experiences on the field.

The workshop helped in promoting an understanding of the myriad problems faced by the North-eastern states in implementing DBT. It also offered the Central and state governments an opportunity to identify the areas in which the Central Government (and its associated bodies) needed to intervene for providing adequate support and infrastructure to the states in effective enforcement of the programme.

Know more about NCAER’s ongoing study on “Implement Digital Direct Benefit Transfers: A DBT Readiness Index for the States of India”.

Malcolm Adiseshiah Mid-Year Review of the Indian Economy, 2016-17

NCAER presented the 2016-17 Mid Year Review (MYR) of Indian Economy at this seminar held in New Delhi.  The MYR presents the most comprehensive, independent assessment of the Indian economy as the Indian Government and its Ministry of Finance begin preparation of the FY 2017-18 Union Budget.

Dr Shekhar Shah opened the seminar delivering his opening remarks, followed by Dr Pronab Sen, Country Director, International Growth Centre’s India Central Programme who was invited to chair the Review. Ms Mythili Bhusnurmath, Senior Consultant, NCAER and Dr Bornali Bhandari, Fellow, NCAER presented the main findings of the Review. The MYR provides an independent stocktaking of the Indian economy’s performance. The Review included two special presentations on ‘New Paradigms for Financial Sector Development in India’ and ‘Healthy Ageing in India: Situation and Challenges’. The first presentation by Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI  assesses the four pillars of the financial sector in India. The second paper by Dr Debasis Barik, Associate Fellow, NCAER examines whether the Indian health delivery system is prepared to tackle the rise in communicable and non-communicable diseases among the elderly as India’s demography changes. During the latter half of the seminar, two invited discussants, Dr Indira Rajaraman, Member, 13th Finance Commission and Dr Shubhashis Gangopadhyay, Research Director, IDF, shared their comments.

Key highlights of the NCAER’s 2016-17 Mid-Year Review of the Indian Economy are as follows:

GDP Growth: NCAER places overall 2016-17 GDP growth (GDP at market prices), in constant 2011–12 prices, at 7.6%. On one hand, the anticipated improvement in the agricultural sector and the associated increase in rural demand will give an upward push to economic growth. The manufacturing sector is also giving positive signals with the Purchasers’ Managers Index and Index of Industrial Production for core sectors and auto sales going up. The domestic aviation sector growth continues to be robust. However, other service index indicators continue to be muted.  Food inflation is also showing signs of dampening in the latter part of the second quarter.  However, fuel inflation may revive. Although urban demand is predicted to remain strong, external demand continues to be volatile.

Agriculture: Unlike the past two years, this year witnessed a normalisation in rainfall at just short of the 100% long period average. The actual rainfall measured as an index on the basis of un-irrigated area under foodgrains as weights was 1.5 per cent above its normal level. Consequently, the area under kharif sowing is about 3.5% more than last year, with the sowing of pulses being about 29.1% more than last year. Thus, our estimates show that the output of kharif foodgrains is expected to reflect an increase of 10 per cent to 11 per cent over last year’s output of 124 million tonnes.

Industry: The Index of Industrial Production (IIP), a measure of industrial performance, shows a negative growth of (–) 0.27% during April-August, 2016–17, as compared with 0.45% growth recorded during the same period of 2015–16. The Gross Fixed Capital Formation (GFCF), a key indicator of investment in the economy, has shown a steady and precipitous fall since the second quarter of 2015–16. In the first quarter of the current fiscal 2016–17, the GFCF touched (–) 3.1%. The core sector showed a year-on-year (y-o-y) growth of 4.6% in 2016–17:H1 versus 2.6 per cent in 2015–16:H1. Six out of eight industries showed higher growth in the 2016–17:H1 as compared to the corresponding period in the last fiscal. The two major components of IIP by economic activities, i.e., Mining and Quarrying (0.6% in 2016 versus 1.4% in 2015) and Manufacturing (-1.2% in 2016 versus 4.5% in 2015) show lower rates of y-o-y growth in April–August 2016–17 as compared to 2015–16. The third major component, Electricity, shows higher growth in 2016–17 (5.1% in 2016-17:H1 versus 4.5% in 2015-16:H1).

Services: The growth of the services sector growth remained more or less stable in Q1 of FY17. But in a break from the past, public administration, defence and other services led the growth in the services sector with a growth of 12.3%, up from 5.9% in the comparable period during the last fiscal. Contrary to this, growth in activity in the services sector declined in September 2016. The Nikkei India Services Business Activity Index fell to 52 in September 2016, down from 54.7 in August (a reading above 50 shows expansion while a number below 50 shows contraction).  Furthermore, construction sector activity, GVA growth in trade, hotels and transport slowed down. However, tourist arrivals increased sharply in July and August 2016, to 17.1% and 11.8%, respectively.

Inflation: After a sequential uptick in inflation in the initial months of FY17 to 6.07% in July 2016, it fell sharply in September 2016 to 4.31%, as measured by the Consumer Price Index (CPI). After declining for 17 consecutive months, the Wholesale Price Index (WPI) inflation turned positive in April 2016, remaining at around 3.5-3.7%. Food inflation was the swing element in both cases, accounting for both the uptick as well as decline.

Monetary Policy: The H1 of FY17 saw a revamping in monetary policy formulation with the appointment of the new RBI governor, Urjit Patel, and the operationalisation of the Monetary Policy Committee (MPC). After the cautious approach adopted by the previous Governor, the MPC unanimously decided to reduce the repo rate by 25 basis points. Furthermore, the Governor, in his post-policy briefing, hinted that the inflation target of 4% would be achieved over five years. The PSU banks continued to be plagued by NPAs and the credit and deposit growth remained sluggish.

External Sector: The first half of the year looked bright on the external front with the current account deficit (CAD) being within manageable limits. India’s merchandise exports turned positive in June 2016, with exports rising at 1.27% y-o-y in June to $22.57 billion, reversing the trend that started in December 2014 due to weak global demand and a fall in commodity prices. Furthermore, after a decline in July and August, exports grew at 4.6% in September, raising hopes that the decline period in Indian imports is coming to an end.

Fiscal Policy: India’s fiscal position remained under stress during H1of FY17. Despite healthy growth in tax revenues, the combination of rising expenditure and lower-than-expected non-tax revenues is likely to test the Government’s resolve to abide by the fiscal deficit target set out in Budget 2016-17. According to the latest numbers released by the Controller General of Accounts, the FD during the period April-September 2016 stood at 84% of the budget estimate for the year. This marks a considerable worsening over the comparable period last year when the FD stood at 68% of the Budget estimate. At 569.3% of the budget estimate, the primary deficit is more than double the deficit during the comparable period last year (182%), indicating that the Government truly has an uphill task on its hands to be able to stick to the targets laid down in Budget 2016-17. Tax collections (net to the Centre) are better at 42.5% of the BE with an improvement in both direct and indirect tax collections.

The Mid-Year Review of the Indian Economy was started at the India International Centre (IIC) in 1976 by Dr Malcolm S. Adiseshiah. Dr Adiseshiah was one of India’s most distinguished economists and educationists, Life Trustee of IIC, recipient of the Padma Bhushan, founder of the Madras Institute of Development Studies, and one of the key architects of UNESCO’s work on education and technical assistance. Now conducted in collaboration with the Malcolm and Elizabeth Adiseshiah Trust, Chennai, the Review has been presented by many distinguished Indian economists since Dr Adiseshiah’s passing away,  MYR remains a tribute, in a long standing partnership with the India International Centre to one of India’s most prominent post-Independence economists, Dr Malcom S. Adiseshiah.

Global Financial Stability in the Age of Low Growth and Interest Rates: What is New?

A low-growth, low-rate era, accompanied by increased political and policy uncertainty, is creating many challenges for policymakers, banks, and corporates in all parts of the world. In this seminar, Dr Ratna Sahay, Acting Director of the IMF’s Monetary and Capital Markets Department, presented the key findings of the IMF’s October 2016 Global Financial Stability Report that analyses these challenges and offers solutions for fostering stability. The presentation focused on risks to the current outlook, the new environment and challenges from the perspective of advanced economies and the emerging markets and the measures that can ensure financial stability. NCAER research faculty and guests from institutions across New Delhi, including, Dr Bimal Jalan, Former Governor of the Reserve Bank of India, joined the discussions. Dr Anusha, Associate Fellow, NCAER presented her views, as the discussant for the seminar.

In emerging markets, including India and China, low interest rates and the global search for yield present unique opportunities for overly indebted firms to restructure their balance sheets. India’s top corporates remain among the most leveraged in emerging markets, increasing bank vulnerability and casting doubts on a smooth process of deleveraging. In advanced economies, the inability to adapt to this new environment could undermine the health of financial institutions and delay economic recovery. The IMF Report finds that short-term risks to global financial stability have abated since April 2016, but that medium-term risks continue to build. Financial institutions in advanced economies face a number of cyclical and structural challenges and need to adapt to low growth and low interest rates. Since these challenges are unlikely to be resolved by a cyclical recovery, there is need for more deep-rooted reforms and efficient macro management. In addition, an unsettled political climate in many countries, lack of income growth and rise in inequality make it more difficult to tackle legacy problems besides exposing economies and markets to shocks. The IMF Report assesses how improvements over the past two decades have raised the resilience of financial systems in many economies and how these benefits strengthen the case for further reform.

Ratna Sahay is the Acting Director of the Monetary and Capital Markets Department at the International Monetary Fund. She joined the IMF in 1989 and has worked in eight IMF departments since then. She has led surveillance and programme missions to several emerging market and low income countries, headed analytical projects and policy papers, and represented the IMF in various fora. She has published widely on financial markets, inflation, economic growth, fiscal policy, debt sustainability, financial inclusion and related issues. Prior to joining the IMF, she taught at Delhi University, Columbia University, and New York University. Sahay holds a PhD in economics from New York University.

Anusha is Associate Fellow at NCAER.  Her recent PhD research focused on using frequency domain time series methods to understand business cycles in India  and their co-movement with credit in India and the US.  Anusha’s broader research interests include business cycles, financial markets and applied time series analysis in macroeconomics.  She is currently working on developing an Indian equivalent of the FAO’s COSIMO model to project the short and medium-term agricultural outlook for India.  She received her PhD in economics from the Indira Gandhi Institute of Development Research and a MA in mathematics from Delhi University.

Skilling India: India’s 3E Challenge of Education, Employability, and Employment

As per the Census 2011 data, India has 730 million people in the age group of 15-59 years, which gives India an opportunity to reap a significant demographic dividend. The government’s skills development policy (2015) notes that India is “presently facing a dual challenge of a severe paucity of highly-trained, quality labour, as well as non-employability of large sections of the educated workforce that possess little or no job skills”.  The situation gets further complicated given the fact that about 93 per cent of the workforce is in the informal sector, and it is difficult to track their skills and impart the requisite training to them. The estimated rate of job creation in the informal sector is higher than that in the formal sector, thus creating relatively low productive jobs. India thus needs to equip its workforce with employable skills and knowledge.

NCAER has undertaken the J.P. Morgan New Skills at Work-India (NSAWI) program under NCAER Labour Economics and Research Observatory (N-LERO). It seeks to focus on the three critical elements of education, employability, and employment. The study aims at contributing both to policy as well as practice pertaining to employability, labour markets and the skilling supply chain. The objective of Phase 1 (out of three phases) of the study was to develop a sharper understanding of the challenges pertaining to jobs and skills – what is working and what is not, and what are the policy recommendations.

This second consultation workshop on this study was held at The Claridges in New Delhi. The workshop was inaugurated by Dr Rajesh Chadha of NCAER, who welcomed the participants and introduced the programme.

Dr Biswajit Goldar, Institute of Economic Growth, chaired the first session on “Skill in India: The 3-E Approach”.  Dr Bornali Bhandari, NCAER, introduced the concept of skills, and pointed out that a broader framework of skills, including cognitive, physical, interactive and vocational skills, are needed in the country. She also discussed the inherent challenges in measuring skills. NCAER has developed an index based on the 3-E concept to assess the skill levels of 21 major states in the country. Ms Tullika Bhattacharya, NCAER, delineated the level of skills employed by 24 key sectors identified by the National Skills Development Corporation (NSDC). The novelty of the index lies not only in the categorisation of skills but also in the fact that it takes into account all three types of education, that is, general, vocational and technical education. Dr Abhiroop Mukhopadhyay of the Indian Statistical Institute, Delhi, argued that education does not translate into actual usable skills though it may be equated to capability. He further remarked that there is a need for a focused discussion on women, especially since most women in India are not participating in the labour force even though their educational aspirations are similar to those of men. Dr Mukhopadhyay also pointed out that while at the macro level, there is a shortage of skills, at the micro level, people do not really want to out-migrate from their local cities and towns. Dr Rajesh Chakrabarti of the Wadhwani Foundation gave critical comments on indices and their relevance. Mr Anil Kumar of the Axis Bank Foundation discussed the challenges of skilling in the rural sector.

The keynote address at the Conference was chaired by Dr Rajesh Chadha and delivered by Mr Pramod Bhasin, Founder and Vice Chairman, Genpact and Chairman, The Skills Academy.  He highlighted that employment is a vastly under-served and under-researched area in India.   The Skills Academy has trained multitudes in domain skills, lifestyle skills and employability skills. The National Skills Development Corporation (NSDC) has made a very robust contribution to the skilling effort. India would account for 35 per cent of the entire world’s workforce in the next 10 years, and educating this workforce and imbuing them with the requisite skills for employment would be the biggest challenge that India would face in the future. India largely exists in the small and medium sectors. The workforce, therefore, needs to be trained for employment in these sectors. Since 60-70 per cent of the people want to work in the government because of the perpetual job uncertainty in the private sector, the logistics of training needs to take this into account. Industries do not provide quality jobs or offer enough job support for the workforce in the country. It is imperative to skill women and to empower them by imparting appropriate training in technology and other areas of employment.  There is a need for skills mapping and addressing the skill gaps.

The third session of the Conference on “Education and Employability: Convergence or Divergence?” was chaired by Professor Jandhyala B.G. Tilak, of the National University of Education Planning and Administration. He remarked that the topic of the discussion reminded him of erstwhile debates on whether to converge mainstream with vocational education. While Ms Mousumi Das, NCAER, and Dr Bornali Bhandari discussed the current challenges in the education and vocational skills sectors, the various discussants emphasised the need for convergence between the two types of education. Dr Ankush Aggarwal of the Indian Institute of Technology, Delhi, averred that engineers are hired in companies, where they do not use the core skills that they are trained in. Mr Raj Gilda of Lend-A-Hand India and Mr Abhishek Gupta, Adviser to the Delhi Government, talked about their respective experiences in bringing vocational education to school education in Maharashtra and Delhi respectively. Mr Gupta outlined the logistics and infrastructure issues in Delhi, such as the challenges of transporting students from school to the laboratory. The key question posed by the discussants was: Are children at a young age, such as a 14-year old in Class 9, mature enough to decide their career options? Mr Jagmohan Bhogal of the Quality Council of India remarked that the goals of the two types of education, that is, mainstream and vocational education, are different, and the two ought to be brought together through careful convergence.

Mr Dilip Chenoy of the Sant Longowal Institute of Engineering and Technology, and erstwhile CEO of NSDC, chaired the fourth session of the Conference on “Employability and Employment: Scaling Up”. Dr Pallavi Choudhuri of NCAER discussed the importance of recognition of prior learning (RPL) and the challenges faced by Micro, Small and Medium Enterprises (MSMEs), especially the shortage of skilled labour.  Dr Saurabh Bandyopadhyay of NCAER talked about the challenges posed by labour laws.  The four panellists of this session included Neeta Das of the Confederation of Indian Industry (CII), Mukesh Gulati of the Foundation of MSME Clusters, Jürgen Männicke of iMOVE, and Rahil Rangwala of the Michael and Susan Dell Foundation. Both Mr Gulati and Mr Rangwala asserted that skilled labour is not one of the key shortages of the MSME sector, and pointed to its inter-linkages with other challenges in that sector, including access & use of technology, access to formal bank credit and access to markets. Another key element is the need for counselling of the MSME owners. The panellists commented on the ambiguity that though industry complained about shortages of skilled workers, it was still not willing to hire certified people for a higher wage versus uncertified people. Further, the Sector Skill Councils are not able to predict the exact number of jobs that would be available in each sector. Jürgen Männicke pointed out similarities between the German model and the Indian model. However, unlike in India, German MSMEs are hiring a majority of the apprentices. In addition, German companies are mandated by law to share data and to become members of Industrial Chambers

The last session of the Conference, a policy roundtable on the impact of technology on job creation, was chaired by Dr Rajesh Chadha of NCAER.  Mr Chauncy Lennon of J.P. Morgan, Mr Achyuta Ghosh of NASSCOM, Mr Ambarish Datta, MD and CEO, BSE Institute Limited, and Mr Santosh Kumar Mehrotra, Professor, Jawaharlal Nehru University, were the panel discussants in this session. The panellists agreed on the need for adopting a sectoral approach to deal with the challenges. It was pointed out that though a majority of the people are not even part of the formal sector, this is not the main problem envisaged. Instead, the focus should be on upskilling workers in the other sectors even as some other types of jobs are expected to dry up.

In an exclusive interview to NDTV, Dr Shekhar Shah outlined the objectives of this study and the key inferences from the first phase of research. He also discussed the challenges of Skilling India in context of its vast demographic dividend and drew up alternative scenarios for the jobs future of the country.

Training Workshop on proposed Impact Assessment Study of Digital India Land Records Modernization program (DI-LRMP)

NCAER organized a training workshop for the proposed Impact Assessment Study of Digital India Land Records Modernization program (DI-LRMP), as a follow up to an earlier preparatory meeting held on 30 August, 2016. The workshop was conducted by Deepak Sanan who is the technical advisor for this proposed study and was chaired by Prof. D B Gupta, a Senior Consultant at NCAER.

Researchers from NCAER, Indira Gandhi Institute of Development Research (IGIDR) and National Institute of Public Finance and Policy (NIPFP) attended this workshop, wherein, IGIDR was connected through a video call. The workshop was also attended by Sudha Keshari (Economic Advisor) and Vipin Bansal (DIGF) from the Department of Land Resources (DoLR), Ministry of Rural Development.

The proceedings of the workshop enabled firming up the questionnaires and other survey instruments for data collection and analysis. The next consultation on sampling and related issues pertaining to the field survey for the project will be held on 7 October, 2016 at NCAER.

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