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District’s digital initiatives draw rave reviews

Collector Babu A. made a presentation at an event organised by World Bank Group and NCAER

: The success achieved by Krishna district in various digital initiatives came in for appreciation at ‘The India launch of Digital dividends: World Development Report 2016’ – Roundtable: How can India best reap its digital dividends?’ organised in New Delhi on May 10.

District Collector Babu A. got the opportunity to give an insight into the innovative steps taken by the district administration for rendering better services to the public with the help of advanced Information and Communication Technologies (ICT). The event was jointly organised by the World Bank Group (WBG) and the National Council for Applied Economic Research (NCAER). Mr. Babu gave a detailed account of the Aadhaar-enabled Direct Benefit Transfer e-POS (e-Point-of-Sale) and other schemes implemented in the district to a gathering that comprised Union Minister for Communications and IT Ravi Shankar Prasad WBG Country Director Onno Ruhl Lead Economist Deepak Mishra and Economic Geographer Uwe Deichmann and NCAER Director General Shekhar Shah.

On the occasion Mr. Babu said the e-POS scheme that helped in curbing leakage of funds in the Public Distribution System earned global acclaim for Krishna district.

The payment of social security pensions through Micro ATMs set up by IDFC Bank was another project that became a role model.

5 percent of Indian marriages inter-caste; in Mizoram, 55 percent

Christian-dominated Mizoram – 87 percent of the population is Christian – has the most inter-caste marriages in India a nation where 95 percent of Indians marry within their caste according to a 2016 report from the National Council of Applied Economic Research (NCAER) a New Delhi-based think-tank.

Meghalaya and Sikkim followed Mizoram with 46 percent and 38 percent of inter-caste marriages according to The Indian Human Development Survey (IHDS-II) based on nationwide surveys conducted between 2011-12. It was put together by the University of Maryland and NCAER. A representative sample of 41554 households contacted for the study was spread across 33 states and union territories in rural and urban India.

The three north-eastern states were followed by Muslim-dominated Jammu and Kashmir (35 percent) and Gujarat (13 percent).

The data belies the perception that with modernity and economic progress traditional barriers of caste have broken down.

The caste system is an ancient relic of a social hierarchy once based on division of labour. People are born into their caste. They cannot change it.

How do people marry in the states of India?

As many as 95 percent women surveyed said their husbands’ caste was the same as their’s. This was the question NCAER used to determine the proportion of inter-caste marriages: “Is your husband’s family the same caste as your native family?”

In Madhya Pradesh almost all (99 percent) people were married in their own caste followed by Himachal Pradesh and Chhattisgarh both at 98 percent.

Indians are legally allowed to marry outside their caste. A law on inter-caste marriage was passed more than 50 years ago but those who do are still threatened or attacked often by their own families.

Change is slow but it is coming

As many as 27 percent of respondents said they knew people in their communities who married outside their caste. In cities this number was 36 percent.

The IHDS-II surveyors asked respondents: “Do you know anyone in your community who has had an inter-caste marriage?”

People are more forthcoming with perception of others than information about themselves the researchers found.

“Think of a village pradhan (chief) whom everyone knows? there is only one pradhan in a village. Knowing someone particularly someone who has engaged in ‘unusual’ behavior like inter-caste marriage is always going to be higher than one doing it oneself” Sonalde Desai a demographer senior fellow at NCAER and professor of Sociology at University of Maryland told IndiaSpend. “I am surprised that only one in four individuals knows someone (in an) inter-caste marriage.”

Govts over the years have promoted cashless transactions

India remains a predominantly cash economy where currency with public appears to be in the range of 12-13% of gross domestic product indicating poor income velocity of money. It renders Indians as amongst the biggest users of cash worldwide. Therefore it has been endeavour of present and past governments to reduce cash from the economy to bring efficiency in transaction increase intermediation and reduce the presence of underground economy.

The most effective way of reducing cash in the economy is the introduction and promotion of electronic payment systems. On the part of government its successful effort to electronically transfer the social benefits directly to beneficiaries lends huge confidence among potential users of Electronic Fund Transfer (EFT). The 2015-16 data on payments systems indicates non-cash payment volume to be in the order of about 15 billion transactions. This translates in to about 12.5 transactions per annum per person. This can be considered as reasonable progress towards less-cash society given the preference for cash based trading in the country.

With increase in ecommerce and mushrooming of app based enterprises in the country people’s attraction towards use of online payment services is likely to increase further. There are several advantages of EFT which are driving its growth. Broadly such advantage include time saving ease of record keeping of expenses reduced risk of theft and loss flexibility in time and location of use and continuous strive of service providers to make it user friendly. However there are certain risks also in terms of data security availability and reliability of internet connectivity transferability across payment systems and infringement of anonymity which inhibits several individuals to adopt EFT.

Progress in Payment Systems 

Considering the non-cash recorded payments Electronic Payment Systems has come of age and it has almost replaced the paper clearing from 64.5% in 2009-10 to 7.3% in 2015-16 in volume terms. In terms of value this change amounts to 11.7% in 2009-10 to 4.5% in 2015-16. Introduction of ECS (Electronic clearing service) NEFT RTGS and products of clearing corporation of India (CCIL) are now common instruments for transferring large funds.

Huge developments are witnessed in retail electronic transfers; plastic money segment including credit cards debit cards prepaid instruments; and mobile banking. The volume and value of transactions through these modes have grown at phenomenal rates (see Table). What is more interesting is that the average size of transactions in terms of value per transaction has also increased from 2009-10 to 2015-16.

It appears India is still far from becoming a credit economy. The circulation and use of debit cards is many times more than credit cards. As of December 2011 the number of outstanding credit cards was 17.7 million which increased to 22.7 million by December 2015. In contrast the number of outstanding debit cards increased from 264 million in December 2011 to 643 million by December 2015. This difference may be on account of nature of the instrument. While both reduce cash holding credit cards are instruments to facilitate credit economy. Debit cards simply reduce visits to bank branches and makes banking that much easy.

The plastic money measured in terms of value of credit cards and debit cards transaction had had compound annual growth rate (CAGR) of 101% during 2009-10 and 2015-16. During the same period number of transactions grew at 90% annually. However this impressive growth is dominated by growth in debit card transactions where value and volume of transactions grew at 152 and 122% respectively during the same period.

Despite lead in overall volume and value debit cards appear to lose out to credit cards when it comes to high value purchases. During 2015-16 the POS (points of sales) volume of credit cards was 786 million with value of Rs 2381 billion. As against this the debit cards volume was 1173 million with value of Rs 1586 billion. This shows the credit power in motivating higher value transactions. However from the same figure one can argue that debit cards system is more inclusive catering to the needs of all segment of expenditure class.

Potential and problems of EFT 

No-cost in transaction non-repudiation and fungibility are the three core properties of cash economy. The success of electronic payment would depend on how close it can bring itself to cash transaction. In case of EFT there are explicit costs of transaction in the value chain which are born either by the consumer or the merchant. The design of this cost needs to be such that it offsets the opportunity cost of not availing these facilities. In case of cash transactions the settlement is instantaneous and is also non-repudiable as it does not leave any trail or proof of transaction. With EFT there is almost no way to eliminate the records of transaction if desired which could on the other hand be used to verify the trail of money.

The regulatory policy stance of the government is oriented towards promoting a less cash/less paper society and hence there is increased emphasis on the use of electronic payment products. However such move require more than establishing infrastructure. There are issue of transaction cost data security and even more importantly the burden of indirect taxes.

Indirect taxes do not differentiate between rich and poor. While direct tax can be designed on the basis of income structure it is extremely difficult to implement the same strategy in the case of indirect taxes. Therefore there is always an incentive for consumers belonging to the stressed income groups to negotiate with merchants for a middle ground that allows them to avoid indirect taxes and obtain cash discounts. However such activities cannot be supported under transparent system such as EFT. Solution lies in reducing the burden of indirect taxes so much that there is minimum incentive for consumers as well as merchants to avoid it. It would be interesting to watch if ecommerce could provide competitive edge over cash transactions on a sustained basis.

(The author is a Senior Fellow at National Council of Applied Economic Research. These are personal views of author) 

Looks like the PDS works

There’s room for more awareness and organisation but the number of people benefiting from fair price shops is growing

Poor people in India depend heavily on the public distribution system. A recent survey by the National Council of Applied Economic Research found that more than 90 per cent ration card-holders in Below Poverty Line (BPL) / Priority Households (PHH) and the Antyodaya Anna Yojna category purchase foodgrain at subsidised prices from the PDS in selected States.

An evaluation study of PDS was conducted in 24 districts in the six States of Assam Bihar Chhattisgarh Uttar Pradesh Karnataka and West Bengal. Of these Bihar Chhattisgarh and Karnataka had implemented the National Food Security ACT (NFSA) or its variant at the time of the survey. The other three States were following the targeted public distribution system (TPDS).

Getting popular

The India Human Development Survey conducted jointly by the NCAER and the University of Maryland supports the finding that there’s been an increase in accessing the PDS nationally. Its popularity is attributed to wide coverage of poor beneficiaries and increasing amounts of food subsidy along with volatile market prices of foodgrain.

It is also heartening to know that the amount of implicit subsidy per capita per person is considerably high in the three States operating under the NFSA compared to the States following TPDS. Implicit subsidy refers to the amount of money saved by a household when it purchases from PDS at a lower price compared to the market price. The amount of per capita subsidy is considerably high for the PHH category in Chhattisgarh and Karnataka at ₹141 and ₹140 per month respectively. Additionally these States provide a subsidy from the State exchequer. In Bihar implicit food subsidy is moderately high at ₹79. The extent of food subsidy is ₹92 ₹73 and ₹65 per capita per month in Assam Uttar Pradesh and West Bengal respectively.

 

Basic objective

The main objective of the PDS is to provide foodgrain at low prices. Prices vary across States that are yet to switch to NFSA. For example BPL cardholders purchase rice and wheat the major two foodgrains sold under PDS at ₹6.15 and ₹4.65 a kg respectively in Uttar Pradesh. However very often the prices are higher than the issue price in all these States. To purchase one kilo of PDS rice BPL families on an average paid 48 paise 31 paise and 4 paise extra in Assam Uttar Pradesh and West Bengal respectively. Similarly for one kilo of wheat they pay on average an extra 33 paise and 97 paise in Uttar Pradesh and West Bengal.
The NCAER survey reveals that lack of awareness of issue price is the primary reason for the discrepancy. In many places beneficiaries know how much to pay for a food basket in aggregate for diversified commodities. But they are ignorant about the per unit price of separate commodities. Display boards at fair price shops are supposed to mention the right amount of entitlement and issue price for each of the PDS commodities. In reality such boards may not be displayed everywhere or what’s displayed may not be legible. On the other hand FPS dealers in some parts of Uttar Pradesh confess that they charge extra to cover the cost of transportation from the godown to the local FPS. Although the cost of transportation is supposed to be reimbursed to the dealer FPS dealers claim that they end up covering it.

Rice and wheat are sold to PHH families at ₹2 and ₹3 a kilo respectively in Bihar following the NFSA norm. However on an average beneficiaries are charged 33 paise and 40 paise extra per kilo each of rice and wheat. Lack of awareness regarding the issue price is still a problem in Bihar. The issue price of these two major foodgrains was even lower at ₹1 a kilo in Chhattisgarh and Karnataka good performers in PDS while the difference between issue price and actual price paid is negligible. Awareness of entitlement and issue price is highest in Chhattisgarh.

BPL families in Assam Chhattisgarh and Uttar Pradesh are entitled to receive 35 kilos of foodgrain a household a month from PDS. Chhattisgarh did not change the quantity of allocation even after implementing the Chhattisgarh Food Security Act (CGFSA) an adapted version of NFSA. However Bihar following the NFSA regime allocates 5 kg foodgrain per person per month. Karnataka after adopting a modified version of the NFSA called the Anna Bhagya Yojna allocated grain based on household size. Grain entitlement for a single-person family two-person family and families with three or more people was 10 kg 20 kg and 30 kg respectively. West Bengal on the other hand allocates foodgrain per individual instead of per household.

Strengthen the system

The proportion of beneficiaries receiving less than their full quota varies widely. Among BPL/PHH households it ranges between 2 per cent in Chhattisgarh and 91 per cent in Assam. On an average BPL families receive 6 kg and 7 kg less than their entitlement in Assam and Uttar Pradesh while it is 1.56 kg per BPL person in West Bengal. In Bihar PHH ration cardholders receive 1.1 kg less than their full quota in a month. Lack of awareness regarding appropriate entitlement along with a weak monitoring system are the primary reasons for this.

To improve the overall functioning of the PDS the monitoring system needs to be strengthened beneficiaries’ awareness regarding entitlement and issue price has to be increased and modern techniques need to be adopted to curb malpractices in the system.

Introducing electronic weighing machines in place of conventional ones to curtail weight-related anomalies could be considered. Though Karnataka has adopted this on a pilot basis in a few districts it is not fully functional due to glitches such as frequent power cuts and problems with internet connectivity.

To tackle awareness-related issues it should be made mandatory for all fair price shops to maintain display boards containing information about entitlement availability of foodgrain and issue price. The information on the board should be written legibly and in the local language. NGOs and government officials should disseminate PDS-related information among those who cannot read. Respondents in the survey suggested that display boards be kept in prominent places in the village such as the local panchayat bhawan and near schools in addition to those at fair price shops. The bottom line was that despite criticism of the way PDS functions respondents were unanimous in the opinion that PDS plays an important role in covering their foodgrain requirement.

The writer is a fellow at NCAER Delhi

Everybody loves a good quota

Unless there is a procedure for notification of groups moving out of the reserved category demands for reservation by groups like the Jats Gujjars and Patidars will continue

I sometimes feel sorry for the governments of Gujarat Haryana and Rajasthan which are plagued by demands for reservation from powerful and aggressive communities. Patidars Jats and Gujjars feel that communities that first managed to board the reservation train are uniting to keep them out. State governments would be perfectly happy to include them in the reserved category if they were not worried about the electoral backlash. Other Backward Classes (OBC) classification for Jats brings a similar demand from Rajputs; Scheduled Tribes (ST) classification for Gujjars brings about protests from the powerful Meena community unwilling to share the ST classification. Gujarat seems to have found a novel way to address these demands: be so inclusive that hardly anyone is left to protest. A 10 per cent quota for the economically backward among upper castes— that is those with family incomes of less than Rs.6 lakh per annum (p.a.) — spreads the net so wide that the excluded group is minuscule.
 
Data on income 
Since income data are hard to come by let us look at three different sources of data to derive estimates of those with incomes above Rs.6 lakh p.a. First data on income tax filers in 2012­13 show that only 13 per cent of individual returns have incomes higher than Rs.5.5 lakh p.a.; once we take into account people who do not file the returns at all this forms about 3.5 per cent of total individuals in the country aged 18 and above. Since incomes may be hidden on tax returns we must look to alternative data. The National Sample Survey Organisation (NSSO) collects information on consumption expenditure not incomes. If we apply household savings rate of about 25 per cent a Rs.6 lakh income p.a. cut­off would result in a cut­off of about Rs.4.5 lakh consumption. NSSO data (2011­12) show that less than 1 per cent of the population falls in this category. A third source of data is the India Human Development Survey (IHDS) of 2011­12 organised by the National Council of Applied Economic Research (NCAER) and University of Maryland. It collects data for both income and expenditure. It shows that less than 2 per cent of the population had household consumption of Rs.4.5 lakh p.a. and about 2.5 per cent had incomes of Rs.6 lakh p.a. in 2011­12. This suggests that whatever statistics we use a Rs.6 lakh p.a. cut­off will exclude less than 5 per cent of the population from being eligible for reservations if the Gujarat example is followed nationwide.
These statistics should calm the passions around this new wrinkle in the battle for reservation in Gujarat. Appeasement tactics used by the Gujarat government are mostly ineffective; they will neither reduce options for middle­income Indians nor will they really expand benefits for the poor among forward castes.
Can we devise a narrower band that might really benefit the poor among groups currently ineligible for reservations? Here our spectacular failure in identifying the poor for issuing Below Poverty Line (BPL) cards gives us reason to be wary. The IHDS survey found that in 2011­12 only 50 per cent of the poor had a BPL card while nearly a third of the non­poor had BPL cards. Almost all observers agree that identifying the poor is a difficult task resulting in errors of both inclusion and exclusion. This is particularly the case when incomes are growing rapidly and a household that is poor in one year may well climb out of poverty the following year. So focussing on just the poor among the general category may be more difficult than we anticipate.
Moreover the demands for expansion of reservation have little to do with the poor among the so­called “general” category. Most of these demands are emerging from angry young men — many of them with college education — among agriculturalist communities that have historically held considerable political clout (for instance the Navnirman movement of the 1970s which the Gujarat government is acutely aware of).
Future of reservation
In order to get out of this quagmire we need to think of the immediate concerns of educated youth and the broader future of reservation in India. What fuels the anger of young men from agricultural communities? As they see it investing in education has got them only minor monetary benefits. With massive growth in private and distance education programmes of questionable quality most college graduates today lack the skills for high­paying private sector jobs. They may well be qualified for lower­level clerical or support positions but for these jobs’ salaries are far lower in the private sector than the public sector. The ratio of government salary to private sector salary for a college graduate has consistently increased; the IHDS data show that in 2004­05 a college graduate earned 62 paisa in the private sector for each rupee in the public sector; by 2011­12 it had dropped to 57 paisa. With implementation of the Seventh Pay Commission this difference will grow. Not surprisingly competition for government jobs is fierce. As Prabhat Mittal Secretary Government of Uttar Pradesh noted in 2015 nearly 2.3 million applications were received for 368 low­ranking positions in the State government. Is it surprising that frustrated young men try to beat this insane competition by demanding inclusion in the reserved category? If government salaries were more on a par with the salaries of the private sector it is possible that this strident demand may subside. If current initiatives for increasing employability and creating more manufacturing jobs succeed this will also reduce the pressure.
A longer­term solution however requires re­evaluation of the fundamental nature of India’s reservation regime. Affirmative action to make space for communities that have historically been subject to discrimination fits well with the Indian ethos of creating a level playing field and is part of the Indian Constitution. But the patchwork implementation particularly for the OBC classification that is currently in place makes little sense and leaves room for powerful lobbies to unite around demands for inclusion.
One of the ways of dismantling the quota raj is to ensure that the reserved category certificate is not a currency that is hoarded by groups who no longer need it. This involves periodic recertification into the reserved category. Unfortunately the current system has an established if imperfect procedure for notification of new groups into the reserved category but not for moving groups out of the reserved category. A first step towards establishing such a process may be to ensure that we collect data on caste/tribe affiliation along with data on basic demographic and housing characteristics in the 2021 population census. This would allow us to move past the exclusive reliance on the 1931 census and obtain information on the current socio­economic conditions of all castes and communities in India.
Frankly I have never understood the resistance from the Office of the Registrar General and Census Commissioner of India (ORGI) for collecting caste data in national population census. If the colonial census could do this in 1931 why can’t we do it today? Collecting data on thousands of castes is difficult but it is by no means impossible. Perhaps the collection of data on caste is a hot potato that the ORGI hopes someone else will handle. But surely national interest demands that this caution be put aside to develop a long­term solution to an issue that has gained such visibility. While we are destined for periodic eruptions of demand for reservations by groups like the Jats without timely and accurate data we have no way of developing a rational system for responding to these demands.
Sonalde Desai is Senior Fellow NCAER and Professor of Sociology University of Maryland. Views are personal.
Published in: The Hindu May 3 2016

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