Estimating the economic benefits of Investment in Monsoon Mission and High Performance Computing facilities

This NCAER study examines the economic benefits of investments made by the Ministry of Earth Sciences in the National Monsoon Mission (NMM) and High Performance Computing (HPC) facilities and their role in improving the accuracy of monsoonal rainfall predictions. The study finds that improvements in weather forecasts, disseminated by India Meteorological Department, have resulted in massive economic gain to households in rain-fed areas by allowing them to take appropriate action based on accurate weather advisories and avoiding losses that they would have suffered in the absence of timely weather warnings. The study covered farming, livestock rearing, and fishing households.

India Policy Forum 2019

The 16th India Policy Forum 2019 Volume comprises papers and highlights of the discussions at the India Policy Forum (IPF) held in New Delhi on July 8–10, 2019.The Annual IPF Lecture for 2019 was delivered on July 9 to a packed audience at NCAER by Professor Stanley Fischer, Former Vice Chairman, Board of Governors, US Federal Reserve. Professor Fischer spoke on “Modern Macroeconomic Policy.” The 2019 IPF Roundtable focused on “How Will the New Indian National Education Policy Deliver?”

2019, Volume 16, Papers






The complete set of IPF Volumes, can be viewed and downloaded here.

River pollution, conservation: UP’s fishing community bears brunt

Regulations of industrial municipal inflow in Ganga at the centre of pollution mitigation policies have dissociated rivers from riverine communities.

The quality of water in rivers Ganga and Yamuna did not improve despite four decades of pollution-mitigation measures. But they did within 10 days of the nationwide lockdown imposed to curb the spread of the novel coronavirus disease (COVID-19) pandemic.

For years the regulations of industrial and municipal inflow in the river have been at the centre of policies and programmes for pollution mitigation. On ground however these projects have mostly dissociated rivers from the riverine communities: An integral part of the river ecosystem since time immemorial.

While we don’t question the objective that drives these mitigation programmes COVID-19 has exposed the truth about their shoddy implementation. This crisis presents before us an opportunity to re-imagine solutions towards a healthier future of our rivers.

Two important components of river pollution mitigations programmes — Ganga Action Plan I & II and Namami Gange — have been about biodiversity conservation and growing public awareness and participation.

However despite having provisions for involving local communities in mitigation and conservation-related activities these policies in many instances have robbed riverine communities off their customary rights over the river and subsequently their means of subsistence. The reach of these programmes is unequal and has been limited to only a handful of elite members.

A fisherman in Kanpur said:

If we get permission to fish in Ganga we can run our households save some money and afford better schooling for our kids. Fishing is banned in this stretch of the Ganga so we work as labourers or housekeepers. Earlier people from our community used to get ponds on lease to grow water nuts (and to fish) but now people from other communities bid in our name and get the lease. Over the years we have been unable to match the bid amount. About 80 per cent ponds reserved for us have been taken away.

Brunt of exclusionary regulations

Just before the lockdown a team from the National Council of Applied Economic Research and the Tata Centre for Development at University of Chicago visited selected villages in search of the fishing communities along the 1140-kilometre-long course of the Ganga in Uttar Pradesh in connection with a research project.

Visits to some of these stretches were an eye-opener wherein the lack of integration of community needs and environmental conservation programmes were evident. But before going into the details of the experience let’s take a look at the river’s course through Uttar Pradesh.

The Ganga enters the state in Bijnor district. The stretch of the Ganga from Bijnor to Garhmukteshwar comes under the jurisdiction of Hastinapur Wildlife Sanctuary and the stretch from Garhmukteshwar to Narora Barrage down south is declared a Ramsar site (a wetland area of international importance) for the protection of Gangetic dolphins.

Further down from Bithoor to Sangam (Prayagraj) we were told that for the last two years the stretch has been identified of having religious importance. Fishing a primary source of livelihood for the poverty-stricken communities has been banned at these stretches.

A woman from a fishing household in Bijnor said: “We are poor…. Our next generation does not want to do this work. But what can we do? How can we pay for their education? There are three-four months when we are able to fish the rest of the months we are either involved in casual labour or agriculture.”

This has created a unique situation: A fisherman is now compelled to poach (illegal fishing) for survival. The ‘invisible’ communities  have not been considered a part of the riverine ecosystem and get excluded in the process of pollution mitigation and biodiversity conservation.

They are either not provided any alternative sources of livelihood or even within some existing programmes they are deprived of the promised benefits on account of faulty implementation.

Our visits also revealed significant social and economic fragmentation of these riverine groups. Weakening of their customary rights over the years low educational status and lack of agency and unity further limit their scope of finding any other means of earning. They even do not have any formal recognition of being riverine communities.

The research team met government officials from the fisheries department.

In their interaction both the representatives of the government and local fisher communities indicated that untreated wastewater discharge was the primary contributing factor for pollution. However the communities attributed this depletion in fish varieties and volume of catch to damming low water volume and most importantly malpractices: use of micro-mesh and poisoning of fish.

We realised that fisherfolks were well-aware of the malpractices but due to their desperate economic conditions and absence of any other means of livelihood are compelled to opt for such practices. A fisherman from Narora said:

No one listens to us. We know that use of mosquito mesh for fishing is destructive but what do we do? You will find 10 hunters in pursuit of each fish in every kilometre of the river. People from other communities bid for lease and are also involved in aquaculture. We have always demanded that water and sand is ours and it should be given back to us. For centuries water and sand belonged to us.

With the spillover of COVID-19 stress onto the rural economy and unavailability of daily wage work the already marginalised section of the population will be pushed into even deeper layers of vulnerability.

Recommendations

The desperate economic needs will continue to force these communities to resort to exploitative means of fishing which in turn can create a conflict between the riverine species and its ecosystem. In order to conserve the river and its species it is also important to conserve the people who live off that river.

It is important that localised and integrated community resource management programmes are established in the protected areas of UP. While considering them an integral part of the ecosystem their long-term experience and local ecological knowledge should not be discounted.

In fact with every pollution mitigation programme or conservation initiative efforts should be made towards bringing together the scientific and experiential knowledge.

Decentralised policy solutions that move from top-down imposition to collaborative and community-led protection and management of river stretches are the need of the hour.

This will not only empower the communities but will also open channels of communication between them and the policy making authorities.

Demand stimulation, supply constraints and recession risks

Placing money in the hands of people could help save lives as our economy looks set to shrink this year and possibly the next.

The coronavirus pandemic reached India late giving us a chance to learn from the experience of countries where it had spread earlier. Drawing on that experience an unprecedented country-wide lockdown was enforced on 25 March. The objective was to slow the spread of the virus and gain time to prepare adequately for its inevitable spread. It is not clear whether this time was well spent because India’s number of cases and more importantly the daily number of deaths are still rising—albeit at a slower pace than when the lockdown was implemented. Some states like Kerala have done very well. On the other hand the rapid spread of the virus in Maharashtra Gujarat Delhi Tamil Nadu and West Bengal is causing great concern. 

Meanwhile a huge price has been paid in terms of lost livelihoods especially by millions of casual wage workers migrant workers and the self-employed. At the National Council of Applied Economic Research my colleagues and I have estimated that gross domestic product (GDP) declined by about 25% in the first quarter of 2020-21 compared to the same period in 2019- 20. This is also consistent with a steep increase in unemployment in April and May estimated by the Centre for Monitoring Indian Economy. However the surveys also indicate a strong recovery of employment as the lockdown was wound down earlier in June.

Against this backdrop it is important to assess what the government has done to stimulate an economic recovery. The dominant narrative is that it has not done nearly enough to stimulate demand. This derives from the way the government communicated its stimulus policies. These were presented as a ₹20 trillion “aatmanirbhar” package announced on 13 May with details spelt out subsequently by finance minister Nirmala Sitharaman. A part of the package comprises structural reforms in agriculture and other sectors which however desirable will pay off only in the medium- to long-term and will do little for an immediate recovery. Another major chunk of the package consists of liquidity infusion measures by the Reserve Bank of India (RBI) and government credit guarantees to incentivize banks to extend credit especially to micro small and medium enterprises (MSMEs) which have been the worst hit by the lockdown. The assistance directly provided by the government or the fiscal component of the package amounts to only about ₹2.6 trillion or roughly 1.3% of GDP. This was quite a communication failure. Analysts and media quickly focused on the fact that what had been hyped as a stimulus package of over 10% of GDP actually involved fiscal spending of just over 1% of GDP. 

The Central government would have been better advised to focus not just on the aatmanirbhar package but also on the substantial fiscal stimulus measures that had been announced earlier. The 2020-21 budget for instance had provided for a demand-stimulating fiscal deficit of 3.5% of GDP. Then when it became evident that the lockdown would lead to a steep fall in revenues additional borrowings of ₹4.2 trillion or 2.1% of GDP were announced to preserve the budgeted expenditure. Without this the demand shock would have been that much more severe. In addition states taken together are running a fiscal deficit of 2.8% of GDP in their budgets which further helps preserve aggregate demand. The central government has also allowed additional borrowing by the states of up to 2% of gross state domestic product. Unfortunately states may not be able to use this extra headroom because it comes with tough reform conditions. 

All this adds up to a demand-stimulating combined fiscal deficit of about 9.7% of GDP; nearly 11.7% if we also count the additional borrowing headroom for states. On the monetary policy front RBI had provided for liquidity infusion of over 4% of GDP prior to the aatmanirbhar package. The government guarantees—part of the package and aimed at incentivizing bank-lending to small businesses and vulnerable groups—amount to another 4% of GDP.

The demand generated by these large fiscal stimulus and liquidity injection measures could potentially revive the economy. But this may be pre-empted by supply constraints: businesses that have shut down disrupted supply chains and the reverse migration of migrant workers. Further what appears as a supply constraint at one stage may re-appear as a demand constraint at the next stage in the circular chain of economic transactions. 

Thus a recession is virtually unavoidable in 2020-21 possibly stretching into 2021-22. The most urgent step now for central and state governments is to provide income support to vulnerable households—through enhanced PM-Kisan and Mahatma Gandhi National Rural Employment Guarantee Act allocations in rural areas as well as a similar employment guarantee scheme in urban areas or a universal income support scheme. These will help preserve lives during the recession. It will also have a strong income multiplier effect because of the high consumption propensity of the poor.

Sudipto Mundle is a distinguished fellow at the National Council of Applied Economic Research .These are the author’s personal views.

It’s not too late for governments to ensure that vulnerable get cash in hand for next few months

India has disappointed itself hugely in the way it handled the migrant labour issue. Why is the government being so tight-fisted in its support for the poor?

Scenes of migrant labour returning home thirsty hungry and helpless shall be a scar on India forever. Images of men women and children walking in 44 degrees Celsius heat on dusty roads and fields often subject to police lathis at times densely packed into trucks and tempos a young man cradling a dying friend a mother delivering her baby by the roadside dry rotis and stale eatables splattered on railway tracks as bodies crushed under a train are taken for cremation unknown and unsung the mad rush at disorganised bus and railway stations are now firmly embedded within our minds.

India has disappointed itself hugely in the way it handled the migrant labour issue. We forgot that they are not beggars. We forgot that they are men and women who come to cities with a dream of improving their lives and that of the families they leave behind at home. Urban India has broken their trust. They are now the “other” we have cast aside even as we strive to bring back “people like us” from across the world.

Is it not astonishing how millions were left to their own devices to reach home among panicking state governments and district administrations? There is no similar precedent of collective and administrative failure anywhere in the world. First the government stopped them subjecting them to intense physical hardship and mental trauma. Then they were allowed to leave amidst great confusion about the availability of trains and buses.

How could governments expect them to stay back in such hardship with minimal arrangements? Why did so many weeks pass before the government deployed trains and buses to help the migrants reach their home states? Why could district collectors not arrange water tankers every few miles when a caravan of hungry tired human beings was walking through their districts? Why could food packets not be distributed? Why could bandages and medicines not be provided for those with injured feet or other ailments? Why could school buildings temple and mosque premises not be used to house them at night? Who will take responsibility for this human tragedy of biblical proportions?

Though robust statistics are not available Ravi Srivastava a leading authority on labour markets assesses that some 10-12 million persons may be desperately trying to get home by whatever means possible.

While the plight of the migrant workers and in some cases their families is the most wretched of all they are by no means the only ones hard hit by the sudden imposition of the stringent country-wide lockdown without any prior intimation or adequate preparation. Based on Census projections there are at present about 450 million persons in the workforce. Of these there would be around 200 million informal workers outside agriculture who have been left with no work no income and hence no food following the lockdown. This would include casual daily wage earners as well as self-employed workers such as vendors carpenters plumbers etc. These informal workers (including the migrants) and their families probably add up to some 600 million persons.

Given the unprecedented scale of the humanitarian disaster facing this entire class of informal workers and their dependents prominent intellectuals including three Nobel laureates have been urging the government to launch liberal schemes of free food and income support for the population at large during these critical days. One of us had earlier estimated the cost of such additional food and income support to add up to about 3 per cent of GDP. 

Against this background the Rs 20 trillion package has turned out to be a public relations disaster. Soon after its much-hyped launch as a 10 per cent of GDP recovery package the actual fiscal stimulus amounted to a mere 1 per cent to 1.5 per cent of GDP. The rest amounted to promises of enhanced credit to various target groups such as MSMEs NBFCs farmers etc. These are promises on which the banks and other financial institutions may or may not follow through. None of this is direct extra money-in-hand for these groups which is immediately needed. Particularly disappointing is the measly allocation of Rs 40000 crore or 0.2 per cent of GDP for MGNREGA and only Rs 3500 crore (0.02 per cent of GDP) for free rations to migrants for two months.

It is also baffling why the government did not focus its messaging on the large genuine fiscal stimulus it had already provided before the latest package. The additional government borrowing announced prior to the package together with the fiscal deficits built into the central and state budgets the 2 per cent of GDP additional borrowing headroom now provided for states and the 1 per cent to 1.5 per cent of GDP actual fiscal stimulus in the package add up to a large stimulus of well over 10 per cent of GDP. But unfortunately here again only a very small component has been set aside for humanitarian relief through the PM-Kisan Yojana MGNREGA and subsidised food rations. 

Why is the government being so tight-fisted in its support for the poor?

Even now it is not late for the Union and state governments to ensure that the “out of work” people get some cash in hand for the next few months. The supply of food grains is not enough. There is need for other items of use in daily life. Besides this will push up demand and stimulate the economy. 

This article first appeared in the print edition on June 4 2020 under the title ‘Crisis and a tight-fisted response’. 

Najeeb Jung is the former Lieutenant Governor of Delhi and Sudipto Mundle is a former member of the 14th Finance Commission and Distinguished Fellow National Council of Applied Economic Research. Views expressed are personal

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