Archives: Publication

Fiscal Implications and Macroeconomic Impact Analysis of the Gas Price Pooling Policy of the Government of India

The NCAER Gas Price Pooling Study captures the macroeconomic impact of the increased power generation and its multiplier effects as a result of greater availability of gas, as well as the total costs of such a policy in the form of subsidies and revenue losses to other sectors. The net benefits are analysed under different scenarios, including plants operating at 30% PLF, 40% PLF and 50% PLF, and with and without the availability of domestic gas supplies.

Press Release – PM Office : PM’s meeting with NCAER and US economists

 PM: Federal structure can be a “development mechanism” not merely a “Constitutional arrangement”

 

Prime Minister Shri Narendra Modi today said India`s federal structure should be viewed as a “development mechanism” rather than just a “constitutional arrangement.” Interacting with a group of 16 eminent economists from the United States the Prime Minister said his focus was to build “Team India” – through a partnership with all state Chief Ministers and by encouraging and facilitating states to take initiatives for economic growth.
Stating that a person who is unhealthy cannot derive benefit from exercise the Prime Minister said that the first six months of his Government were focused on making India healthy once again. The “exercise” would begin now he added.
The Prime Minister said there would be a youth-centric focus to all policies of his Government as 65 percent of India`s population is below the age of 35. Therefore skill development and job creation would continue to be accorded the topmost priority.
The Prime Minister stressed on the need to inject technology into government processes and decision making saying this would provide the best possible solution to the problem of corruption. He said the Government`s focus on infrastructure and “Digital India” would boost employment opportunities even in the rural areas.
The Prime Minister said the success of the Pradhan Mantri Jan Dhan Yojana would not only bring economic benefits but had also boosted the confidence within Government as a key objective of the scheme (opening bank accounts for the poor) has been achieved.
Speaking on the occasion Finance Minister Shri Arun Jaitley gave an overview of the various decisions taken by the Government over the last six months in the economic sphere. He said there was a mood of optimism and expectation from the new Government and the process of pragmatic and realistic decision-making was giving results.
The session was moderated by Dr. Shekhar Shah Director-General of the NCAER. The economists will participate in the Neemrana Conference organized by NCAER beginning tomorrow.

Mapping exclusion

Three members of a Dalit family in Maharashtra’s Ahmednagar were killed one of them decapitated before being thrown into a dry well in Jawkhede Khalsa village on the night of October 20. The investigation is still on and the jury out on whether it was an act of caste violence or the result of a dispute.

In recent times however it seems there is a surge in the number of reported acts highlighting caste-based violence. Ahmednagar district seems to have acquired a dubious distinction for being most violent against Dalits. In this district about 44 cases of atrocities were registered in 2012 which increased to 112 in 2013. About 79 cases had been already been registered till October 2014.

In Maharashtra during a 16-year period between 1995 and 2011 about 4256 cases of atrocities were registered under the atrocities act by Dalits which comes to about 266 cases per year. What is striking is that while there was a decline in the per year cases from 343 in 1995 to 136 in 2002 thereafter the numbers have increased steadily from 136 in 2002 to 304 in 2012. This increasing trend in atrocities indicates the persistence of caste with increased intolerance and violence against Dalits.

Caste discrimination and violence is a national problem. However little is known about the day-to-day occurrence of this practice. The India Human Development Survey (IHDS 2) conducted by the National Council of Applied Economic Research (NCAER) and the University of Maryland in 2011-12 asked the respondent a direct question: “Does anyone in your family practise untouchability?” In case the response to this question was in the negative a follow-up question was asked “Would it be okay for a Scheduled Caste person to enter your kitchen or use your utensils?” The idea was to know assuming a household had acquaintances who belonged to the lower castes if they would have free access to household utensils and say even the kitchen supposed to be the purest part of the household. The IHDS is the largest non-government pan-Indian household survey. It covers over 42000 households representative of class and social group.

Results from the combined responses to these two queries show that across India 27 per cent of households admitted to practising untouchability. Many who responded to the first question in the negative responded positively to the second. How many of us even in urban India keep separate cups and plates to serve food to our domestic helps? This is despite the fact that they clean our houses tend to our infants and even cook our food. The notion of purity or pollution takes strange forms indeed.

The break-up of those who agreed to practising untouchability across social groups shows that the largest practitioners are from among the Brahmins (52 per cent) followed interestingly by the OBCs (33 per cent) as opposed to the forward castes (24 per cent). Is this indicative of the growing tension between the OBCs and SCs arising from economic competition? Only further research can tell. Interestingly the SC (15 per cent) and Scheduled Tribe (22 per cent) households also reported practising untouchability but to a much lesser extent. The prevalence of untouchability among the SCs could either be due to the sub-castes among them — the higher sub-castes practising discrimination against the lower ones in some spheres if not all.

Or it could be due to the practice being so internalised by them that their positive responses could be indicative of the SCs following the regressive caste norms set for them by the higher castes.We also found the prevalence of the practice to be higher in rural areas where religious practices and beliefs are more of a norm.

The same break-up across religious groups shows an even more intriguing pattern. Jains show up as practising untouchability the most (35 per cent) followed by Hindus (30 per cent). The results for Jains are not conclusive because of the small sample in the survey. Surprisingly Sikhs (23 per cent) and Muslims (18 per cent) too confess to this practice. These findings indicate that conversion has not led to the total change of mindset that was hoped to be achieved and caste identity is a sticky baggage difficult to dislodge.

Our analysis however shows that the practice falls with a rise in education. So while 69 per cent of Brahmin households where the highest adult education was between classes one and four said they practised untouchability only 45 per cent of households agreed to the practice where any adult in the household had graduate-level education. Education seems to reduce the prevalence of the practice the most amongst the Brahmins and the OBCs.

Interestingly the level of household income does not make any difference. The difference between the poorest and the richest households claiming to practise untouchability was a mere 2 per cent in rural and 1 per cent in urban areas. Clearly caste discrimination tends to remain neutral to the economic standing of people.

The states that show up as the top ones with respect to the practice of untouchability are Madhya Pradesh at 53 per cent Himachal Pradesh at 50 per cent Chhattisgarh at 48 per cent Rajasthan and Bihar at 47 per cent each Uttar Pradesh at 43 per cent and Uttarakhand at 40 per cent. States with the lowest incidences are Andhra Pradesh at 10 per cent the entire Northeast at 7 per cent Maharashtra at 4 per cent Kerala at 2 per cent and West Bengal at 1 per cent.

The data show that 70 per cent of households denied practising untouchability. Even assuming that many respondents were uncomfortable with revealing the truth this indicates an evolving trend. But it is a long road ahead to when we might manage to erase the practice from our minds and our deeds.

The writer is an associate fellow at the National Council of Applied Economic Research and is part of the IHDS team.

Let’s add value to our trade agreements

The underlying purpose of trade agreements is to obtain access to resources and markets that help in increasing the value and volume of trade. This adds to the domestic income. Traditionally trade agreements are evaluated for their trade creation and diversion effects among the member countries based on the trade values. However national earnings are not truly reflected through values of trade.

 

This is because a country may be earning high on exports of a product but its net earnings from the product may be low due to large imports of related inputs and a low value added component in the finally exported product. Which is why it becomes important to consider the value-added component of the gains in trade.

For India the experience with free trade agreements has been mixed. Assessment of their impact is impaired either due to data constraints or due to the inability to evaluate effect of the counter factual. Already in the past trade and investment agreements widened their horizon beyond trade in goods. Issues relating to competition are increasingly emphasised by using the rules of origin (RoO) instrument of trade policy.
The RoO is used to determine the country of origin based on criteria such as last substantial transformation and the value added (VA). The value added essentially refers to the income after reducing the cost of inputs from the value of output. The RoO is required to handle issues related to anti-dumping completion and quotas besides the data necessary to compile trade statistics.
Importance of the RoO has increased as global supply chains are increasingly spliced and a specific product can travel transit and transform substantially before reaching the point of ultimate consumption. For instance the automobile supply chain consists of design raw material (steel glass) components (tyres air bags and windshields) assembly marketing and distribution. Each of these has various levels of value added and can be dispersed across countries. And yet trade agreements do not consider these consequences while assessing the prospects. This despite the RoO concept being in place for a while now.
The value-addition structure of Indian exports is aligned with the world exports with 24% of the value due to foreign inputs and 76% due to domestic production. Further 42% of the domestic value added is consumed at the first export destination while another 34% is consumed at the second destination.
By comparison for China foreign inputs account for 33% of total exports. Of the 67% domestically-produced component only 25% is consumed at the immediate export destination while 41% is consumed after the first transit. This underscores China’s presence in processing and assembly trade. So a country’s export competitiveness could be on the comparative strength of its intermediate imports and the net national earnings may not be as large despite high value of exports. Under such circumstances exports tend to misrepresent the net gains and incomes.
Expanding global supply chains increasingly challenge the traditional income measures based on export values. The value-added assessment of trade potential is imperative if India plans to effectively generate income through trade expansion by engagement in trade agreements.

Prejudice, even in pardes

An upper-caste Gujarati family who ran a grocery shop in the US wanted to know the name of the Indian sitting next to them in a private van in Pennsylvania. When his name did not reveal his caste they probed further and asked for his surname. He said he was South Indian and didn’t have a surname.

 

“I told them I knew why they were asking me these questions. They wanted to know my caste” says Sakya who told them he was dalit. Over the next few days they sat as far away from him as possible while travelling together. Sakya a PhD in history says he has never faced any racial discrimination from white Americans; it’s his own countrymen that have discriminated against him.
Education qualifications do little to erase the caste biases that Indians carry with them. A recent survey by the National Council of Applied Economic Research ( NCAER) and the University of Maryland US revealed that one in four Indians continue to practise untouchability in some form in their homes.
It’s the same story across continents. The National Post writes of how for dalits of Canada’s British Columbia the barbs are subtle. “They come in seemingly innocuous questions about your family village or last name…They show up in careless conversation among friends behind closed doors. A messy house is referred to as a chamar house.”
Indian immigrant Kamlesh Ahir told the newspaper: “It doesn’t matter if we are a doctor teacher because we belong to the lower castes…. They think we are bulls-t. We are zero….I’m in Canada … But the bulls-t castes are still here. We live it every day.”
“When Hindus move to other countries the caste system transmigrates with them. Wherever Indians migrate to America they build temples. They also export a Brahmin priest to perform the rituals in the temple. In this way the same structure repeats itself” says noted dalit scholar Kancha Ilaiah.
While New Jersey has one of the largest Hindu temples in the US dalit entrepreneur Deelip Mhaske a prominent member of the Indian community is never invited to any cultural or religious Hindu function such as Diwali and Holi.
“The dalit gurdwara in Burnaby (British Columbia) was founded in 1982 after dalit worshippers felt unwelcome in an upper-caste gurdwara” writes Cheryl Chan in Canada’s National Post. Chan points out the irony of the fact that Sikhism does not officially have a caste system.
A year ago the British parliament officially outlawed caste discrimination. A UK government study had found evidence of caste-based discrimination at the workplace in the delivery of services and in the education system. Coventry a city in Central England saw one of the most degrading cases of caste discrimination. “An elderly dalit lady was receiving home care from the city council which would send a council worker to her house to bathe her. One of the council workers happened to be an Indian of a higher caste. When she discovered the lady was dalit she refused to give her a bath” recalls Lekh Pall an activist with the Anti-discrimination Alliance.
People often hide their identity as dalits as they do not want to be discriminated against says Dr Sushant Godghate a doctorate in engineering who lives in Japan. “I had an Indian colleague in Japan who I knew to be Buddhist (dalit convert). When I asked him if he would like to take part in the Ambedkarite movement in Japan he refused saying he was not from the community” says Godghate.
Recently an upper-caste Hindu in an office in Japan overheard a dalit colleague talking of organizing protests over the brutal murder of three members of a dalit family in Maharashtra last month an incident reminiscent of the Khairlanji killings. The dalit colleague says he and the upper-caste Hindu co-worker would earlier hang out together but after this incident the upper-caste colleague began to avoid him.
Recent protests in New York over the killings in Maharashtra saw several other groups join in from African American church groups to Arab artists. However upper-caste Indians were conspicuous by their absence.
In a paper on Australia’s South Asian diaspora Deakin University researcher Amit Sarwal argues that “despite the modern nature of South Asian diaspora in Australia and despite the egalitarian nature of Australia and even if caste as an institution cannot be practiced publicly or caste consciousness has not survived this consciousness has very subtly merged into class consciousness and a demonstration of social status in relation to others. The ‘others’ being those who do not belong to the same jati linguistic group and economical level…”
When an upper-caste Indian who has grown up in a deeply hierarchical society leaves India he wants someone to dominate says Chandra Bhan Prasad mentor at the Dalit India Chamber of Commerce and Industry. “Africans in Durban say Indians treat them worse than whites do. For them blacks are like dalits. But in countries like the US where they have no one else to suppress they turn on dalits” says Prasad.

    Get updates from NCAER