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Given this uncertainty over the reach of PM-KISAN and its targeting the relevance of the scheme needs to be carefully evaluated during this period.

The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is the first universal basic income-type of scheme targeted towards landed farmers. It was introduced in December 2018 to manage agricultural stress. Initially the scheme was targeted at small and medium landed farmers but with the declining growth in gross value added of the agricultural sector it was extended to all farmers in May 2019. The Union budget had allocated Rs 75000 crore to this scheme in 2020-21.

PM-KISAN is a useful vehicle to provide support to farmers during the lockdown and it was included in the Pradhan Mantri Garib Kalyan Package and on March 28 it was announced Rs 2000 (out of Rs 6000) would be front-loaded to 8.7 crore farmers between April-June. But was this a useful way of relieving distress during the lockdown? Data from the Delhi-NCR Coronavirus Telephone Survey Round 3 (DCVTS-3) conducted by the NCAER National Data Innovation Centre in mid-June provides some useful insights. 

The target geographical area for DCVTS is the Delhi-NCR. The DCVTS-3 included 52 per cent rural and 48 per cent urban households from Haryana Delhi Rajasthan and Uttar Pradesh. The survey offers a holistic perspective to understand the extent of income loss of farm households their experience of hardship and the role of PM-KISAN in alleviating their suffering during April-June. Out of the 3466 households in the sample 18 per cent reported cultivation as the primary source of household income. 

The survey records a somewhat lower level of economic distress among farmers than among other groups. While farmers faced some logistical challenges in transporting and selling their produce 97 per cent of them continued to harvest rabi crops and prepared for the kharif season. Nearly 75 per cent of the cultivators who usually hire labourers for agricultural activities continued to do so. 

As a result farmers were relatively immune to the economic impact of the lockdown. About 32 per cent of them experienced large income losses in the month of May which is much lower compared to the proportion among casual wage workers (73 per cent) and business households (70 per cent). About 20 per cent of farm households reported no reduction in their income in May. 

The proportion of households that had to borrow to meet their day-to-day consumption needs during the lockdown was relatively low for the farmers (34 per cent) compared to casual wage workers and business households. While 7 per cent of farm households suffered from occasional unavailability of food during the lockdown this figure was much higher for casual workers (24 per cent) and business households (14 per cent). 

In the months of April and May 21 per cent of 632 farm households received cash transfers through PM-KISAN. Among the recipients around two-thirds reported receiving Rs 2000 and about a fourth received Rs 4000 in April and May combined possibly because family members engaged in agricultural activities may be co-residing within a household.

On the whole when compared to non-recipients of PM-KISAN (including both farm and non-farm households) these households exhibited lower signs of economic distress. About 35 per cent of rural PM-KISAN recipients suffered income losses to a large extent in comparison to more than half of the non-recipients. A little more than a third of PM-KISAN recipients borrowed money during this period as against 48 per cent of non-recipients. However these households were somewhat better off than the general rural population even before receiving PM-KISAN benefits. Thus their relative immunity to the income shock may not be solely due to PM-KISAN. 

Two aspects of this scheme present particular challenges. First PM-KISAN is not reaching all farmer households as intended. Most of the farmers in UP Haryana and Rajasthan own land and should be receiving benefits. But only 21 per cent of the cultivators interviewed reported receiving the benefit. The exclusion is greater in UP than in Haryana and Rajasthan. Second this scheme is not pro-poor since recipients of PM-KISAN seemed to be better off than the general rural population even before the lockdown. Given this uncertainty over the reach of PM-KISAN and its targeting the relevance of the scheme needs to be carefully evaluated during this period

Bhandari and Pramanik are senior fellows at NCAER Desai is a joint professor at NCAER and University of Maryland. Views are personal

The economies of India and China were roughly at par back in 1962 but we have been left far behind

China’s recent intrusions at multiple points along the Line of Actual Control (LAC) in Ladakh are unquestionably the most serious incidents at the India-China border since 1962. The main events are well known. From around 19 April Chinese forces began to push the LAC further inside territory claimed by India and towards the Chinese claim line at multiple points: the Bottleneck in Depsang near Daulat Beg Oldi (DBO) Patrol Point (PP) 14 on the Galwan river PP 15-17 at Hot Springs near Gogra and further south at the so-called Fingers 4 to 8 on the north-east bank of the Pangong Tso lake. When Indian forces realized that these were not routine post-winter manoeuvres and attempted to push the Chinese back it led to aggressive confrontations including the 15 June clash at PP 14 that resulted in the unfortunate death of 20 soldiers and many more injuries for the Indian forces and also casualties on the other side.

In the disengagement negotiations that have followed China has successfully implemented its usual tactic of two steps forward one step back. Both sides are pulling back a kilometre or two on either side of each confrontation point to create a buffer zone. But since the Chinese army had first moved forward before partially moving back after negotiations the effective LAC has been shifted further west of the Indian claim line and closer to the Chinese claim line. This is not the first time that China has made such intrusions. But it is the first time since 1962 that China has simultaneously intruded at multiple points all along the LAC in Ladakh in the process reportedly occupying a vast expanse of land claimed by India. Two questions arise. Why has China made such a move at this time? And why does India tolerate these repeated incremental moves through which China is gradually shifting the effective LAC towards its claim line?

One explanation for the Chinese move is the Darbuk-Shyok-DBO road which is nearing completion. This 255-km all-weather road reduces travel time from Leh to DBO from two days to six hours and aims to secure India’s supply lines to the military base at DBO as well as the Karakoram Pass just above it. This pass India’s gateway to the Xinjiang province of China is of enormous strategic importance. On the east it gives India direct access to China’s strategic highway G219 which links the restive provinces of Xinjiang and Tibet. On the west this pass gives India access to Pakistan-occupied Gilgit-Baltistan and the China Pakistan Economic Corridor (CPEC) that passes through it. The CPEC highway is China’s main supply line for transporting oil and other strategic goods from the Pakistani port of Gwader port on the Arabian Sea to Kashgar in Xinjiang. Occupying vantage points close to the Darbuk-Shyok-DBO road and gaining the ability to cut this critical supply line to DBO and the Karakoram Pass should the need arise are thus of vital strategic importance to China.

Another explanation is that China now wants to enforce its 1960 claim line which it had actually secured in 1962 before a partial withdrawal. Seen along with China’s aggressive moves in the East and South China seas to impose its will on littoral neighbours like Japan Philippines Vietnam Malaysia and Indonesia it reflects Beijing’s switch from Deng Xiaoping’s doctrine of China’s “peaceful rise” to the more hegemonic doctrine of Chinese President Xi Jinping. In my view these explanations are not mutually exclusive. One folds into the other.

The other question is why India accepts repeated intrusions that incrementally shift the effective LAC further into territory claimed by it. The short answer is that India may not have much choice. The narrative of India-China relations has been dominated by India’s defeat in the 1962 border war between the two neighbours but China’s real victory was its dramatic and unprecedented economic growth over four decades which has left India trailing far behind.

Back in 1962 both economies were of comparable size. In fact they were broadly comparable even as recently as in 1980. But today China’s economy is nearly five times the size of India’s. This difference in economic power is directly reflected in the defence capabilities of the two countries with China’s capability far exceeding that of India. This is a sobering reality that has to be factored into any Indian response.

Rich country strong army” was Japan’s driving slogan that led its great modernization following the Meiji Restoration of 1868 and its emergence as Asia’s pre-eminent economic and military power in the early 20th century. It was the same principle that led China’s emergence as Asia’s leading economic and military power in the late 20th century. It is also the goal that India must pursue diligently if it is to protect its interests in a period of emerging Chinese hegemony. This is a long-term goal requiring a radical transformation from a sclerotic dirigiste and unequal economy to one that is nimble and dynamic but also inclusive like most of the successful countries of East Asia.

Meanwhile China’s premature assertiveness under Xi Jinping might actually have helped India by setting alarm bells ringing across capitals in Asia and beyond. The collective resistance of these countries to Chinese power may hopefully persuade its current leader to walk back to Deng’s shrewd path of China’s “peaceful rise” without posing a threat to others.

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

Until a viable vaccine is found finding new ways to cope with the unexpected seems to be our only recourse to brace against the unexpected challenges thrown by the virus

When the famous US family therapist Virginia Satir talked about coping with life’s adversities she was unlikely to have had images of a pandemic like COVID-19 in mind. But her words have a grim relevance today as we learn to live with the unforeseen and unprecedented situation caused by the Coronavirus. A recent telephone survey conducted by the National Council of Applied Economic Research (NCAER) through its Data Innovation Centre documents several insightful findings about public behaviour and the health and economic outcomes of both the virus and the lockdown imposed by the Government to curb its transmission.

The findings explain the surge as most respondents while adhering to safety protocols admit that they took advantage of the “unlock” phase to step out of the house when there was no pressing need. At the same time the economic trough has been gloomy even after opening up with a high percentage of the workforce losing jobs or facing salary cuts. This despite a majority going back to work in the “unlock” phase.

The survey titled The Delhi Coronavirus Telephone Survey (DCVTS) was undertaken in Delhi and the National Capital Region (NCR) in three rounds between April 3 and 6; April 23 and 26; and June 15 and 23 respectively. The most notable finding during the first round of the survey was the successful communication by the Government of the dangers associated with the virus and the consequent need for a stringent lockdown — nearly 87 per cent of the respondents asserted their support for the lockdown to be extended for two more weeks beyond its original end date of April 14 notwithstanding the hardships caused by it.

The study also throws light on other aspects of dealing with COVID-19 including the level of awareness among the people about the risks and symptoms of the disease; their threat perceptions in terms of the chances of contracting the virus and their attitudes relating to mandated safety protocols such as hand hygiene social distancing and the use of masks. In addition it highlights the impact of the lockdown on the incomes and livelihoods of all sections of society.

Pandemic makes inroads: With the virus making nascent inroads into the country during late March and early April it was important to explore awareness levels about the disease and the possible prevention measures among the general public. A strange paradox that emerged in the first round was the dissonance between people’s perceptions about the dangers posed by the virus and the possibility they envisaged of getting infected themselves.

While almost 95 per cent of them averred that the virus was highly dangerous as many as 65 per cent of them did not expect themselves or any of their household members to get infected. This sense of confidence in the ability to sidestep the infection was obviously put to the test after the easing of the lockdown in June which has been followed by a massive surge in positive cases in Delhi and the adjoining areas.

Immediate impact of the lockdown: With a complete shutdown of all activities and commercial establishments starting March 25 the first phase of the NCAER survey  indicated that 25 per cent of the rural and 33 per cent of the urban residents suffered shortages of essential items including food supplies cooking fuel and even medicines. Subsequently however while shortages of essential supplies somewhat eased when the respondents were interviewed during the second round of the survey in the third week of April people’s worries had now squarely shifted to the economic impact of the lockdown. The predominant concern during this period was the decline in incomes and loss of livelihoods due to the closure of offices and businesses.

During DCVTS-2 an overwhelming majority of the respondents — 82 per cent —reported loss of income or wages especially daily wage workers and employees in small businesses. Further among these 72 per cent of casual workers complained that their incomes and wages had suffered “very much” indicating that the brunt of the economic distress was borne by workers from the informal sector. Even among the salaried class 38 per cent of the workers either received truncated salaries or were relieved of their jobs.

Interestingly and perhaps as a saving grace farmers did not seem to be overly affected. Only 34 per cent reported a drop in incomes during the lockdown.  This because most of them were busy harvesting the Rabi crop and doing preparations for the Kharif crop during this period.

Focus on safety measures during “unlock” Phase I: The most conspicuous results of the NCAER’s DCVTS were observed in the third round which virtually stood at the cusp between the lockdown and phased “unlocking.” Characterised by the opening up of a range of commercial activities and establishments this period in early June was critical to determine how far people were adhering to safety measures against the disease. Some level of complacency was witnessed after the “unlocking” as 73 per cent of the respondents reported going out for some reason during the period of one week prior to the survey.

More worryingly as high as 61 per cent of the respondents above the age of 60 years had ventured out of their homes despite the advisory to elderly people to remain indoors as they fall in the high-risk category. Overall there was a general adherence to the precautionary measures specified by the Government and health authorities with 95 per cent of the surveyed people affirming that they were wearing masks or face coverings while going out; 66 per cent reported frequent use of hand sanitisers; and only 0.8 per cent of the respondents claimed that they did not follow any precaution at all.

Economic repercussions of COVID-19: In what could signify a gradual economic revival post the lockdown 78 per cent of the households reported that their members had resumed going to the workplace in the second and third weeks of June. But the trajectory of loss of livelihoods and incomes for daily wage workers and small businesses reported in the second round of the survey continued in the third round too.

Thus DCVTS-III showed that more than 70 per cent of the households relying on wage work and business as the main source of income suffered extensive loss of earnings. A large section of these households was also compelled to borrow money to counter financial distress. In fact medium and small businesses have literally withered under the onslaught of the economic earthquake unleashed by the virus with 52 per cent of them reporting suspension of activities during the lockdown in May and June and 12 per cent shutting down completely.

Have welfare measures mitigated financial suffering?  Apart from documenting the adverse impact on incomes and wages the third round of DCVTS also focussed on the role of Government programmes and measures to ameliorate the suffering of the marginalised sections. It was found that a large number of households — 58 per cent of the total surveyed and 61 per cent in Delhi alone — were given extra rations through the use of Aadhaar cards and e-coupons. About 35 per cent received cash transfers from the Government in May and June taken together. While most of the fund transfers were achieved through Jan Dhan accounts the Government also used other schemes like the Ujjwala Yojana and PM Kisan programme to offer financial relief to the affected households.

So what does the future portend? The results of three rounds of the NCAER survey could offer some insights to policy makers for negotiating the rough road ahead as we brace to meet the persistent challenges of a virus that refuses to go away. Until a viable vaccine is found possibly by next year turning to Virginia Satir’s practical advice to find new ways of coping with the unexpected seems to be our only recourse.

(The writer is Consultant Editor at NCAER. Views expressed are personal)

To reach self-sufficiency India needs to reduce Chinese imports. But it must do this in a way that does not violate WTO norms

The India-China relationship is now at a nadir following border clashes in the Ladakh region. The ‘Boycott China’ war cry reverberates across India. Though it emanates mostly from common people or consumers the government has also indicated in one or two cases that Chinese investments are not welcome.

Indian industries on the other hand have provided a measured response saying that disengagement with China is not possible in a short span as the supply chain of production has been geared towards imports of Chinese intermediate goods. The search for alternative suppliers may begin if the government wishes so but it would take some time to reorient production with alternative suppliers.

In hindsight if the Atmanirbhar Bharat initiative is to succeed there is no alternative but to bring down the imports of cheap Chinese products a large part of which result from the Chinese exchange rate policy and the dumping of goods with underwritten government subsidy to their exporters. Furthermore India needs to adopt a balanced approach so that the policy action adheres to the WTO norms and the country does not have a loss of face.

Here are some measures India can consider:

Restrict FDI flows from China: The Department for Promotion of Industry and Internal Trade recently revised its policies on foreign direct investment (FDI) restricting funds coming from five countries that share a border with India.

Since investment is neither covered under the GATT TRIMS or GATS which India has committed to the move is not a violation of any WTO commitment. This is indeed a good tactical move by the government.

Impose uniform rules across private and PSUs: In the aftermath of the attack by China’s People’s Liberation Army the Department of Telecommunications (DoT) has asked Bharat Sanchar Nigam Ltd (BSNL) to rework its tender for the upcoming 4G business by excluding Chinese equipment.

BSNL had shortlisted Chinese suppliers because of the low cost. However when it comes to commerce introducing such a fiat for PSUs and not imposing the same set of rules for private players ( but only imploring them to reduce their dependence on Chinese equipment) does not set a good precedent. This practice will kill PSUs in the telecom sector and in other sectors too if replicated.

Set the right perspective for public procurement: Annually the Central government spends nearly 13 per cent of the GDP to acquire supplies services and capital assets. The large size of procurement outlay empowers the government to leverage the same to implement select national policies.

Government entities can for example require that contractors adopt fair employment practices encourage purchases from MSMEs and promote innovation. Countries across the world do use public procurement as a tool to set their own agenda. This needs to be a decisive tool if Atmanirbhar Bharat is to succeed.

However we need to refine our public procurement system. By and large the government has adopted the two-bid system where vendors are requested to submit both technical and financial bids in sealed envelopes while tendering for any project/service.

First the technical bids of the various vendors are evaluated as per the standard laid out and subsequently the financial bids of the qualified vendors are opened to find the entity with the lowest bid. The contract is given to the lowest bid among the technically qualified vendors.

In this two-bid system the procurement agency has very little role in ensuring quality/standard. Of course one can argue that the technical bid evaluation criteria may be made stringent to ensure quality. However one invariably finds that the selection criteria of a technical bid are more of a checklist than guidelines to identify standard/quality of the bid or to fulfil the desired objective. Adopting L1 may not the way to promote Atmanirbhar Bharat.

Use of anti-dumping duty judiciously: Given that India and China are both members of the WTO and have extended the MFN (most favoured nation) status to each other India is not in a position to impose additional import duty selectively on Chinese imports. However we can impose anti-dumping duties on Chinese goods keeping within the WTO rule-book.

It is a known fact that China follows an aggressive pricing policy to export goods and many a time with tacit financial support from the government. Among WTO member-countries India is an active player in respect of imposition of anti-dumping duty. However most levies are usually negated by the WTO dispute settlement body after examination of evidences submitted by the Indian government. India needs to build its technical capacity in this respect.

A close interaction between government industry bodies and economists are a must for filing evidences to the WTO panel which can rightly put forward India’s stance.

Discourage imports of finished Chinese goods though Nepal: If India becomes vigilant on the imports of Chinese goods one can expects that Chinese consumer goods will be routed through Nepal through the informal channel. These products directly compete with Indian products in the heartland of northern India especially in Tier-II and -III cities. Strong action is required on this front.

Make use of trade facilitation measures: Since the rules of the same are not well laid out in the WTO India has much leverage to use this channel to discourage Chinese imports. For instance imposing a tighter standard may simply discourage Chinese imports.

Frequent scrutiny of Chinese imports for complying with various trading procedures and sending more samples of agricultural product imports to check whether they meet the necessary sanitary and phytosanitary standards would give the message to the traders/industrialist that Chinese imports are not wanted. Once they get the signal they will surely establish alternative supply lines for their required imports.

The writer Sanjib Pohit is Professor NCAER. Views are personal.