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Impact Evaluation of the Maharashtra CAIM Programme

The Vidarbha region in Maharashtra since long been facing an acute agrarian crisis, causing distress to a large part of the local population whose primary occupation is agriculture. The crisis has been shaped by a number of factors, including fragmentation of land leading to tiny landholdings, scanty and irregular rainfall, sparse irrigation facilities, and lack of opportunities for non-farm activities. Six of the 11 constituent districts of Vidarbha—Akola, Amravati, Buldhana, Wardha, Washim, and Yavatmal—have been most adversely affected by the crisis, which has tragically led even to a spate of suicides by farmers in the region. In this backdrop, the Government of Maharashtra, the International Fund for Agricultural Development (IFAD), and the Sir Ratan Tata Trust (SRTT) joined hands to form a consortium to fund a programme to ensure a steady increase in the incomes of the poor farmers and farm workers in the rural hinterland of Vidarbha. Implementation of this programme, titled, Convergence of Agriculture Interventions in Maharashtra (CAIM), commenced in 2012 and ended in December 2018.

A socio-economic impact evaluation study was carried out by NCAER during January-June, 2019 which observed that the CAIM supported programmes had noticeably and sustainably enhanced the living conditions of the households and villages in distress, with a large number of households benefitting from it. The programme has helped achieve considerable level of women’s empowerment and tangible long-term benefits for the targeted population through various means, including debt redemption, drudgery reduction, a micro livelihood plan, social enterprises, and joint asset ownership.

Child marriage: Nothing to celebrate

According to the 2011 census 7.4 million people in the country were married before the age of 18 years 88 per cent of whom were girls. UP Andhra Pradesh West Bengal Rajasthan Bihar Maharashtra and Madhya Pradesh together amounted to 70 per cent of child marriages in India

We celebrated the fifth anniversary of the historic UN resolution on ending child marriage yesterday. Hence the time is ripe to assess how far India has succeeded in its goal of reducing the number of child brides. The UN resolution which came into effect in  2015 is fundamental to building strong international standards that recognise child marriage for what it is: A violation of fundamental human rights. According to a UNICEF report released in 2014 titled Ending Child Marriage: Progress and Prospects child marriage is most common in South Asia and sub-Saharan Africa with South Asia accounting for 42 per cent of all child brides worldwide. Of these one in three is found in India yet the nation was not among the 116 countries that supported the UN Resolution. In fact barring Afghanistan and the Maldives other South Asian nations too ostensibly failed to ratify the resolution despite persistently battling the challenge of child marriage and its concomitant adverse impacts. A peek into history throws up another ironical picture.

The Elizabethan and Jacobean eras spanning the mid-16th to early 17th centuries in England were some of the most conservative periods in history replete with tales of docile women and chauvinistic men. Yet early marriages were rare. Although the minimum legal marriageable age was 12 years for girls and 14 for boys records reveal that the mean marriage ages ranged from 25 for women to 27 for men.

Historians assert that in medieval England the primary reason for late marriage among labourers and the middle class was financial. Young couples could barely afford a roof over their heads and had to keep their romantic impulses in check till their earnings reached subsistence level well into their mid-20s.

In 20th and 21st century India poverty is again the overarching reason for the anomaly in conjugal well-being but its outcome is the exact opposite. In a 2011 research paper titled Delaying Marriage for Girls in India: A Formative Research to Design Interventions for Changing Norms UNICEF found that poverty in Rajasthan was the biggest reason for fathers pushing their daughters into an early marriage.

These data are ratified by the India Human Development Survey (IHDS) conducted by the National Council of Applied Economic Research (NCAER) in collaboration with the University of Maryland USA in 2004-05 and 2011-12. The IHDS includes a household module as well as a module administered to 33510 married women aged 15–49 years. A ray of hope offered by data from the UN and other agencies points to the declining rate of child marriages in India between 1991-2011. The IHDS too found that an increasing proportion of women were delaying marriage but the mean age of marriage for women in the country continues to remain low. As of the second wave of IHDS released in 2011-12 almost 41 per cent of the women in the age group of 15-32 years were married between 16 and 18 years of age.

An analysis of data from the National Family Health Survey (NFHS-I) along with IHDS-II indicates that the percentage of women in the 20–24 age group who were married before 18 declined from 56.8 per cent in 1992–93 (NFHS-I) to 36.2 per cent in 2011–12 (IHDS II).

However the number of child marriages and its prevalence among girls remains very high even in recent times. According to the 2011 census 7.4 million people were married before the age of 18 years 88 per cent of whom were girls. Uttar Pradesh (UP) Andhra Pradesh West Bengal Rajasthan Bihar Maharashtra and Madhya Pradesh together contributed to 70 per cent of child marriages in the country with four districts of Rajasthan — Bhilwara Chittorgarh Tonk and Ajmer — and Lalitpur from UP being “hotspots” for the occurrence of child marriages in India.

Says an elderly resident of Tonk himself married at the age of five “There are a lot of child marriages in our community due to poverty and poor literacy. My wife came to stay with me when I was 15 and she was just 12.” Citing his personal experience he avers that child marriage is antithetical to marital happiness and health as it puts a major burden of responsibilities on the boy and entails numerous health problems for the girl. Child marriage has been found to have negative consequences on the young bride’s health economic opportunities and her children’s health. Early marriage negatively affects the bride’s autonomy over contraceptive use resulting in a higher likelihood of early and high-risk pregnancies. It also put her at risk of sexually transmitted infections and  intimate partner violence. Child marriage also makes young girls more vulnerable because it leads to lower education attainment and diminished opportunities to develop social networks. Another UNICEF report of 2005 Early Marriage: A Harmful Traditional Practice points out that at 67 per cent India has the highest levels of domestic violence among women married by the age of 18. What does the future hold for these girls-women in a society confronted with unprecedented social and economic challenges and a rapidly transforming anthropological and demographic landscape?

According to Heather Hamilton Global Coordinator of Girls Not Brides a global partnership of more than 1300 civil society organisations from over 100 countries committed to ending child marriage “The UN resolution situates child marriage firmly within the post-2015 development agenda recognising the need to end child early and forced marriage.”

Alex George Senior Consultant for Child Rights at Child Rights Focus advocates effective policy enforcement and stronger legal actions. The Prohibition of Child Marriage Act 2006 which makes it illegal for girls to marry before the age of 18 and for boys under 21 years also must be implemented stringently.

Actions however speak louder than words. A small village in Tonk has been taking the lead in monitoring child marriage and leading discussions with other community members on its damaging effects.

Last year the village was declared child bride-free under the UNICEF’s Laadli Samman (Honour your daughters) campaign. A small step but with a gigantic portent for girls to thrive and live their dreams before being shackled in premature matrimony.

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

Published in: The Pioneer November 22 2019

NCAER forecasts GDP growth at 4.9% for FY20

India’s economy had grown at 6.8 per cent during the last fiscal but quarterly GDP growth has been on a steady slide for six straight quarters from 8.1 per cent in Q4FY18 to 5 per cent in Q1FY20

 

NEW DELHI: Joining the steady stream of agencies slashing India’s growth forecasts Delhi-based think tank National Council of Applied Economic Research (NCAER) has predicted that GDP growth is likely to crash to 4.9 per cent for both the second quarter and the full fiscal year. 

 

The agency’s economists also said that while the government’s efforts have focused on addressing supply side issues data indicates that the real problem is on the demand side with consumption falling across the board. 

 

India’s economy had grown at 6.8 per cent during the last fiscal but quarterly GDP growth has been on a steady slide for six straight quarters from 8.1 per cent in Q4FY18 to 5 per cent in Q1FY20. 

 

“The RBI’s MPC has done what it needs to do. But the problems are on the fiscal side and in their recognition” NCAER Distinguished Fellow Sudipto Mundle said “Reducing corporate tax recapitalising banks…were attempts to revive the economy from the supply side. But the problems are primarily on the demand side. What is needed is to get money into the hands of consumers especially poor consumers with a high propensity to consume. Recognition (of the problem) has not been adequate and responses have been piecemeal”. 

 

The last few quarters have seen industrial growth tanking from 11.3 per cent in Q1 FY19 to just 2.7 per cent in Q1FY20 and high-frequency indicators for the second quarter indicate that this figure may worsen. Cargo movement across rail ports and airways has also shown a substantial fall noted NCAER’s Bornali Bhandari. Real private consumption expenditure growth has fallen from 9.8 per cent in Q2FY19 to 3.1 per cent in Q1FY20 while real government fixed capital formation growth has gone from 11.7 per cent in Q3FY19 to 4 per cent in Q1FY20. 

 

The divergence in retail inflation and wholesale inflation also shows that it is urban food inflation especially in vegetables that is driving retail inflation growth. “But in rural markets it is going down. This is a sign of consumer distress we have in the rural sector” Mundle noted

 

 

Published in: The New Indian Express November 17 2019

NCAER pegs India’s FY20 GDP growth at 4.9% as slowing demand weighs

The National Council of Applied Economic Research (NCAER) has pegged India’s gross domestic product (GDP) growth for 2019-20 at 4.9 per cent the lowest among the recent forecasts by rating agencies multilateral institutions research firms and government institutions.

“India is experiencing a decline in growth which is sharper than the global slowdown. The sharp decline in growth reflects a growth slowdown across virtually all sectors. It is primarily being driven by a simultaneous deceleration of all the drivers of aggregate demand” the New Delhi-based policy think tank said in its mid-year review released on Saturday.

For the July-September quarter the report forecasts gross value added (GVA) growth at 4.9 per cent. The second-quarter and full-year forecasts have been arrived at by using a model developed by a joint team of the NCAER and the National Institute of Public Finance and Policy.

The NCAER’s outlook comes just days after global ratings agency Moody’s cut its calendar year 2019 GDP forecast for India to 5.6 per cent from 6.2 per cent and State Bank of India (SBI) and CLSA forecast a growth rate of 5 per cent for FY20. A week earlier Moody’s had cut India’s credit rating outlook to ‘negative’ from ‘stable’.

In its report the NCAER said that while the farm sector and agriculture output had been looking up the industrial sector outlook remained grim.

“Capital goods showed negative growth for nine months in 2019 with this slowdown deepening further in August and September. The overall outlook for the industrial sector remains gloomy due to weak demand and investment activities” the report said.

In the services sector the indicators available for the second quarter point to a decline in the growth of most services. The decline in railways cargo traffic international air cargo traffic and cargo handled at major ports taken together is indicative of a general decline in the level of economic activity” it said.

The report said that while the Reserve Bank of India (RBI) had cut the repo rate by 135 basis points (bps) till October this year the transmission of rates has been weak raising concerns about the effectiveness of monetary policy in reviving real output growth. It said the credit extended to micro and small industries was declining and had been aggravated because of the liquidity crisis in non-banking financial companies (NBFCs).

The report also raised concerns about the Centre’s revenue situation and said that while some of the revenue shortfall would be offset by squeezing expenditure the fiscal deficit might be larger than budgeted estimates of 3.3 per cent of GDP. “It is evident that the real economy has been experiencing a sustained slowdown. Unfortunately because of weak transmission it is unlikely that monetary policy can be very effective in reviving growth at the present juncture. Providing a fiscal stimulus may be desirable but also challenging unless it can be financed through better revenue generation” the report said.

How to go about auctioning public assets

Focussing on short-term revenue maximisation can hurt long-term welfare. Auctions must be redesigned to meet a wider set of goals.

Since the last decade the auction of key public goods has emerged as yet another important tool in India for resource mobilisation. As a result the auction mechanisms are increasingly being designed to maximise revenue. However designing these auctions with the single-minded focus of appropriating more and more revenue for the government may be imposing long-term costs on other sectors of the economy.

For example bids in mineral auctions — which require revenue from minerals to be shared with the government — have ranged from 2 per cent to more than 200 per cent with 14 winning bids of more than 100 per cent suggesting that the winners were willing to part with more than the prescribed value of the resource.

Such high costs are justified only when certain malpractices such as hoarding or outbidding competitors are in play leading to an oligopolistic market structure creating artificial scarcity etc. This could also strangle the more productive downstream industries such as metal and metal products which have much higher employment and output multipliers than the mineral industry.

Hence while mineral auctions could be considered successful in the short run due to high revenue generation the loss of jobs and the fall in production levels in the long term may more than offset such gains. Similar concerns have been highlighted by TERI which states that auctions in minerals “have the potential to reduce the financial viability of metal making industry and reduces competitiveness”.

Economic trade-off

This trade-off between short-term revenue maximisation for the seller and long-term efficiency in the overall economy has been duly noted under the study of auctions in economics. Indeed this conflict exists in all sectors where the resource being auctioned acts as a productive input for other spheres of the economy as well. A simple hypothetical example provides insight.

Let’s imagine the government auctions to contending firms the private ownership of a public good (say highways) which serves as an input for all the competing firms. Auctioning a higher fraction of the public resource may lead to greater revenue realisation for the government; but at the same time it will also lead to the privatisation of a larger part of the previously free public resource which will result in an increase in the said firms’ cost of production.

This in turn would reduce firms’ production and increase the market price leading to a dampening effect elsewhere in the economy. Hence simply auctioning a higher proportion of the public good to gain more revenue may prove costly in the long run. Land auctions are yet another example where such a trade-off may be most likely.

Different approaches

Alternate auction mechanisms rather than revenue maximising ones may be required to balance the short-term financing need of the government with the overall economic benefit. The Vickerey-Clarkes-Groves auction mechanism is one such method where theoretically the winning bidder has to make transfers to all other bidders to offset their losses.

Putting theory to practice however may need more nuance. One way would be to employ end-user agreements. For example in the case of mining auctions this would appear as bidders ensuring some supply to domestic players. Such end-user agreements are common in land auctions where a parcel of the land is required to be devoted to low-income housing. Another way might be to practice ‘asset recycling’ which involves commitment from the government to allocate the revenue received from the sale/lease of pre-existing assets into some welfare-generating projects with the view to offset efficiency losses to other stakeholders.

Australia has proved to be successful in the implementation of this practice. For example recently three new highways of 49.8 km costing A$160 million have been funded by Infrastructure NSW an independent body created by the state of New South Wales through its asset recycling programme. Moreover a five-year National Partnership Agreement on Asset Recycling in Australia mentions increased economic activity and employment as the desirable outcomes to achieve the objectives of enhancing growth and productivity through sale/lease of existing public assets.

This idea is gaining traction in India as well. For instance the NHAI plans to generate more than ₹85000 crore through asset recycling to finance its road construction work. However the efficacy of asset recycling would essentially depend upon the government’s capacity to invest the proceeds into its most productive unit with the view to maximise public value.

India must also learn from international experience where auctions have been used to usher higher technological standards rather than simply creating wealth for the government. This can be introduced through a more stringent bid qualification requirement for participation in auctions.

Designing the mechanism

In sum the present approach of short-term revenue maximisation from auctions can hamper long-term welfare growth. The need of the hour is a strategic approach that incorporates context-specific application of mechanism design tools for designing auctions that lead to holistic gains. To achieve these multi-dimensional goals policymakers obviously need to take the help of specialists in designing the auction procedure. It is ironic that not just academics noted this problem long ago; economists observed it too and have devised mechanisms to overcome the issues. Yet specialists/ mechanism design experts have never been involved in auction procedures.

The non-professional approach in India is best explained by the fact that revenue generation from auctions is typically 3-4 times government’s expected revenue. It would appear that policymakers have very little idea of the subject they are dealing with so surely this is where auction specialists need to step in for the greater public good.

Madhura Dasgupta and Samarth Gupta are Associate Fellows and Sanjib Pohit is Professor at NCAER. Views are personal

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