On 17 September 2022, the Government of India launched the country’s first National Logistics Policy. While states such as Uttar Pradesh and Gujarat have launched similar policies in 2018 and 2021 respectively, this is the first such measure at the national level to consolidate and address concerns of the logistics and allied sectors. The launch of the policy marks a new phase in India’s push towards synchronised infrastructural development, one that aims to integrate its various modal arms to benefit the citizens and the industry alike. The policy will bring together a range of initiatives in infrastructural development, more specifically transportation, taken over the course of the past few years and will streamline the efforts as the country aims to occupy a greater role in the global economy. The policy has received appreciation from industries and academia as a key driver in removing duplication in efforts and resources and reducing the cost of logistics in India.
Boost to Logistics and infrastructure
Over the course of the past few years, the central government has undertaken several initiatives to upgrade transportation infrastructure and bring down the cost of logistics. Steps taken range from upgrading the shipping and road infrastructure through the Sagarmala Project and Bharatmala Pariyojana respectively to the more recent Gati Shakti Bill passed in the Parliament in August 2022. The latter will facilitate setting up a university and give the required push to skills and research in infrastructural development. The Sagarmala Project will connect water ports along the 7,500 km coastline of the country, thereby bringing down the logistical costs for the movement of domestic cargo. On the other hand, the Bharatmala Pariyojana, launched in July 2015 along with the Sagarmala Project, involves developing nearly 26,000 km of economic corridors to assist the Golden Quadrilateral (GQ) and the North-South and East-West (NS-EW) corridors. The project includes upgrading bypasses, elevated corridors, inter-corridors, and feeder routes, spanning across states at an estimated cost of Rs. 6.92 lakh crore till 2024.
Other major projects involve setting up 35 multi-modal logistics parks in key industrial cities across the country at a total cost of Rs. 50,000 crores. The parks will act as nodal centres for industrial activity and enable seamless freight movement, increase cost efficiency, and reduce dependence on imports. National Infrastructure Pipeline (NIP) launched in 2019 with a five-year deadline is another key step in boosting infrastructural development in the country through public-private partnerships. The policy focuses on using private sector expertise with clear direction from the government for transport, logistics, energy, water, communication, social, and commercial infrastructure. Several other measures such as the E-Sanchit (2017) for paperless processing of documents for trading cross-border trading, FASTag, an electronic toll collection system (introduced in 2016 for seamless payment of toll taxes), the Goods and Services Tax, and the E-way bill have been introduced over the years to provide the required support to boost commercial activity and industrial production.
Cost Reduction through Integration
The National Logistics Policy streamlines initiatives and provides well-intentioned guidance and policy direction to the private sector and different arms of the government for infrastructural development. Through a well-integrated, reliable, and economical logistics network, the policy aims to boost the economic growth and trade competitiveness of the country. The policy has the intended objective of reducing the cost of transporting goods and raw materials from one place to another while ensuring ease of business. Although India has made large-scale investments in upgrading basic infrastructure, according to the World Bank Logistics Performance Index, it has struggled to improve the overall logistics framework of the country as measured by the index. From a score of 3.07 (ranked 39 out of 150 countries) in 2007, it reached a ten-year high of 3.42, ranking 35 out of 160 countries in 2016. However, both its score and ranking dropped in 2018 to 3.8 and 44 (out of 160) respectively, marking a period when the government gave a huge infrastructural boost through several key projects for roads, railways and waterways.
Infrastructural development is a long-term endeavour and investment done now will have an impact in the medium and long term. The National Logistics Policy intends to provide the required fillip to the sector and the Indian economy for medium and long-term consolidation of government funding on infrastructure. Through the policy, the government aims to put India in the league of countries with a well-functioning and well-oiled infrastructure and logistics machinery similar to the developed economies of Japan or Germany. Both countries rank among the highest in logistics management and spend less than 8-9 per cent of their GDP on logistics costs. On the other hand, India spends nearly 13-14 per cent of its GDP on logistics, a cost, which if reduced will not only open up funds for the private sector for capacity expansion but will also help reduce the cost of producing goods and services and improve competitiveness in the domestic and international market. This shall enable India to increase its exports by reducing its indirect logistics cost by 10 per cent, amongst other things.
The logistics sector provides jobs to nearly 22 million people, directly and indirectly. A boost to the sector, through a singular policy which offers greater clarity on regulation, investment, infrastructure expansion, and geographical footprint of industry and manufacturing will further increase employment opportunities in the sector and allied industries. Furthermore, it encourages innovation in the logistics sector by allying industry, academia and government to set up a logistics Centre of Excellence and promote innovation in the field. Through a unified logistics interface platform (ULIP) and Ease of Logistics (E-LogS), the policy focuses on introducing technology in the logistics ecosystems thereby forming two fundamental pillars to the same. ULIP intends to benefit not only the various government departments and ministries but also shippers, truckers, and logistics service providers by enabling information exchange on a real-time basis. Ease of Logistics (E-LogS), as a central tenet of the policy, will be developed by the industry department to allow for digital registration, coordination, and monitoring of the time-bound resolution of issues.
A Holistic Approach to Logistics
The National Logistics Policy aims to reduce logistics costs and will not only improve efficiency across the value chain of a product by lowering the cost of inputs and transportation, but it will also allow for value addition and greater scope of entrepreneurship and innovation in the most traditional sectors. Accordingly, the policy primarily focuses on the transport sector by boosting infrastructure with assistance from various schemes such as Sagarmala, Bharatmala, and PM Gati Shakti National Master Plan. It will generate employment directly, as the government invests in infrastructure projects, and indirectly by creating demand and facilitating the efficiency of the supply chain.
A technological approach to infrastructural development under the policy is likely to improve the quality of employment generated and contribute to enhancing the livelihoods. Lastly, the policy intends to deal with the long-standing ill of red-tapism and bureaucratic delays in government procedure by increasing coordination among ministries, departments, and other stakeholders. It encompasses and calls for coordination between 20 government agencies directly, and 40 partner government agencies. Other stakeholders in the policy are expected to include export promotion councils, shipping agencies, logistics service providers, inland container depots, container freight stations, and an information technology ecosystem.
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Munugode: Pacesetter for Telangana 2023?
The aftermath of the 2018 Telangana Assembly Election saw the Telangana movement wane, as compared to the previous election in undivided Andhra Pradesh. Since then, current Telangana Chief Minister and Telangana Rashtra Samithi (TRS) Chief K. Chandrasekhar Rao (KCR) has reflected on his aspirations for a rising role in national politics. Of late, KCR, as he is popularly known, has been working on bringing reforms and displaying the Telangana model of development. While this has garnered immense media coverage and highlighted his acute showmanship, the political vacuum created by a weak Indian National Congress (INC) coupled with the Bharatiya Janata Party (BJP)’s aspirations to open another flank in south India, have changed the political dynamics of the state.
From two parties that dominated politics in Telangana in the first few years of its formation, the electoral fabric of the state has witnessed the rise of several players, most notably the BJP. Each party, new and old, has been attempting to establish its unique vote base, at times by poaching leaders from across the aisle, and otherwise making attempts to reach out to groups which are socially well-known and have large numbers. With the 2023 Assembly elections, the second in the state, less than a year away, politics in Telangana is churning. This was evident during the Munugode Assembly bypolls recently, an event which at another time would not have gathered enough steam to warrant attention. Several political analysts are calling the bypolls to the assembly both a pacesetter and a unique platform for all major parties to display their strength before the state elections next year.
From Telangana Movement to The First Assembly Election
The 2014 Assembly elections in undivided Andhra Pradesh were held in the shadow of the Telangana movement. The bifurcation of the state was an impending reality with elections scheduled in a manner and sense that the elected representatives from the two regions were due to form two independent assemblies. The new state of Telangana was to have 119 Members of Legislative Assembly (MLAs). In this scenario, KCR, pioneer of the Telangana movement, banked on the demand for a separate state and registered a staggering victory, securing 63 of 119 seats. The INC, another strong force in the state won 21 seats with a statewide vote share of 25.2 per cent, which was still far behind TRS’s 34.3 per cent. Telugu Desam Party (TDP) came in third with 15 seats and 14.7 percent vote share, followed by Asaduddin Owaisi-led All India Majlis-E-Ittehadul Muslimeen (AIMIM) with seven seats and 3.8 per cent votes. AIMIM’s footprint has largely been limited to the Hyderabad region of the state. The BJP has been making concerted efforts to expand its base in the state and won five seats with a vote share that was nearly double that of AIMIM at 7.1 per cent in 2014.
Between 2014 and now, the TRS has strengthened its hold on Telangana by implementing several welfare reforms under its party government. Its electoral position received a boost in 2018, as KCR called for early elections and recorded a whopping victory in the 2018 polls. Between 2014 and 2018, the TRS increased its tally by 25 seats, recording a 47.4 percent vote share in 2018, a jump of 13.1 per cent from 2014. The INC, which came in second, managed 19 seats, two less from 2014 and a slight increase in vote share, clocking 28.7 per cent, 3.5 per cent more than 2014. It was in an alliance with the TDP which came down to just two seats from 15 in 2014. The BJP also witnessed a drop in its electoral fortunes to one seat in 2018 (from five in 2014). While the BJP maintained its vote share at 7.1 per cent, TDP’s share fell significantly from 14.7 per cent, to just 3.5 per cent in 2018. Hyderabad-based AIMIM was another key player in the elections and retained its seven seats from 2014 but its vote share dropped marginally to 2.7 per cent in 2018 (from 3.8 per cent in 2014). In the years since the 2018 Assembly election, the BJP has reinforced and strengthened its campaign in the entire state and is emerging as a key contender in the Hyderabad region, registering victories multiple times during bypolls and local body elections.
BJP Repeating Huzurabad in Munugode
To the BJP, the Munugode bypolls open an opportunity to repeat its victory in Huzurabad 10 months ago. The Huzurabad Assembly constituency, a TRS stronghold since 2004, was represented by rebel Eatala Rajender for four terms between 2009 and 2021. The bypoll in November 2021 was a result of Rajender’s resignation and move to the BJP. The party managed to win the election by riding on Rajender’s popularity, winning by a margin of nearly 24,000 votes. Through this, the BJP dealt a strong blow to the TRS in its stronghold and relegated the INC to third position. The INC candidate lost the deposit, having failed to secure more than one-sixth of the valid votes polled in the constituency, a huge fall from 2018 when the party won upwards of 61,000 votes from Huzurabad.
By banking on Congress rebel Rajgopal Reddy’s popularity at the local level and bringing key central leaders such as Amit Shah to campaign for him, the BJP is looking to repeat its Huzurabad victory. The party’s fortunes received a boost after Huzurbad and a staggering performance in the 2020 Greater Hyderabad Municipal Corporation elections, both of which are helping it build an anti-TRS narrative for Munugode and 2023 Assembly elections. A victory in the Munugode by-election will add another feather to the party’s electoral cap in the state, with several victories in local elections since 2014.
The Munugode Challenge
The impending Munugode by-elections have highlighted internal fault lines in the two main parties—TRS and INC—and reflect the changing face of state politics in the run up to next year’s election. The INC’s local unit is in chaos. The bypoll was necessitated due to the resignation and subsequent shift of its incumbent MLA Komatireddy Rajgopal Reddy to the BJP. For a party which had a strong presence in Nalgonda district, where Munugode falls, the INC is facing increasing pressure owing to local Lok Sabha Member of Parliament (MP) and Rajgopal’s brother Komatireddy Venkat Reddy’s rebellion. The latter has openly defied the party by refusing to attend a meeting by national Congress leader Priyanka Gandhi and opening a fight with Telangana Congress Chief A Revanth Reddy. The MP has also threatened to not campaign for the party in the local polls, a key development in the light of the attention the provincial election has received with the appearance of major central leaders on the campaign trail for other parties.
Venkata Reddy’s defiance is not the only challenge for the state Congress. Telangana Pradesh Congress Committee (TPCC) Chief A Revanth Reddy’s style of functioning and management of the state unit have been called into question by several leaders. Moreover, the party has witnessed an increasing spate of desertions as more than half of the party’s sarpanches and mandal-level representatives in Munugode have quit to join the TRS in the past few months. In the state, the party is likely to witness external pressures apart from internal tensions. In addition to this, the rise of the BJP has created a direct challenge to the INC’s vote bank in the state, converting the 2023 election into an uphill battle for the flailing party.
For the TRS, the road ahead in the constituency might not be as smooth. With a party government in the state and successful implementation of several schemes and programmes in the past few years, the TRS had a clear upper hand that it failed to bank on so far, at least in Nalgonda. The party has not announced an MLA candidate yet amidst rising clamour from within to give the ticket to an Other Backward Class (OBC) candidate, a community that forms 80 per cent of the electorate. Local party leaders have opposed the nomination of former MLA K Prabhakar Reddy for the seat with some local leaders quitting the TRS to join the BJP in protest against his candidacy. According to them, Reddy has lost people’s confidence and was inaccessible to the people and the local cadre during his previous tenure as MLA. The party is finding it difficult to nominate another candidate for the election, fitting the sweet spot of caste politics and internal party dimension.
Trial Run for 2023 Elections
The Munugode elections are crucial for the TRS and KCR. They are pulling all stops to repeat a third victory in the state in 2023, despite being in the thick of challenges at multiple fronts – anti-incumbency since 2014, a rising BJP, and rebellion in local party units. However, the party’s position in the state remains strong. It received a boost as 12 of INC’s 19 MLAs joined the TRS months after the 2018 elections. Coming closer to 2023, the Nagarjuna Sagar by-elections in 2021 have helped bring the mojo back for the ruling party as it retained the seat with 18,000 plus votes, a feat it aims to repeat in Munugode.
For the Congress, retaining Munugode is a matter of prestige, even if it’s a huge challenge. Raja Gopal’s desertion, under whose leadership in the constituency the party won a whopping 49.7 percent of the vote share in 2018, is a huge loss. The local election will set the tone for the party’s 2023 campaign but a return to power in the constituency, let alone the state, will be no easy task.
While the BJP has faced multiple setbacks since 2014 from Rajasthan to West Bengal and Punjab, it is looking to make new forays in south India, a bastion of regional parties, largely unaffected by its Hindutva brand of politics. However, its retention of Goa and a comeback in Karnataka give it hope. Its attention on Telangana to open a second account in south India may show some results, boosted by multiple victories and unexpected performances in several local elections in the state.
Status of the Indian Economy
As Indians head into the festive season for the year, alarmingly increasing prices of food items and rising unemployment in August have raised concerns about the state of the Indian economy over the last few months. The economy recovered from the economic impact of the Covid-19 pandemic much faster than most other countries in 2021. In 2022, the increase in private consumption along with the revival of growth sectors such as travel, tourism, and hospitality along with investments in infrastructure, technology services, and manufacturing contributed to an optimistic outlook of the growth rate in the economy for the 2022-23 financial year. However, challenges such as a major heatwave which impacted crop production, high inflation due to high oil prices, increasing geopolitical tensions between Russia and Ukraine, and depreciation of the rupee are factors that have proven to be challenging to the growth of the Indian economy so far this year. As we head into the 2022 festive season, let us have a look at some of the major economic indicators, including inflation, unemployment, and what they signal for the state of the Indian economy moving forward.
Amid surging inflation, are Households worried as we head into the festive season?
In 2022 so far, inflation has remained above the Reserve Bank of India’s (RBI) target upper limit of 6 per cent, surging to a high of 7 per cent in August last month. The rate of inflation in the country had fallen from a high of 7.8 per cent in April this year to 7.01 per cent in June and further to 6.71 per cent in July after the RBI introduced a series of repo rate cuts to ease the inflationary pressures on the economy. However, despite this, inflation in August was recorded at 7 per cent, driven by an increase in food prices, which comprises 60 per cent of the basket of goods in the Consumer Price Index (CPI). In the food category for the month of August, inflation was recorded at 7.6 per cent, driven by an increase in the prices of cereals, milk, fruits, and vegetables. Economists also state that with kharif production this year predicted to be relatively lower, food prices are likely to increase further. Overall, the inflationary pressure on the economy also seems broad-based, as all segments have recorded an inflation rate of above 6 per cent for August.
The inflation rate in 2022 so far has been considerably higher than the last financial year, during which the average inflation in India was 5.13 per cent, a decline of around 1.49 per cent from 2020. This was attributed to the sharp rise in commodity prices worldwide, driven by supply change disruptions caused by the COVID-19 pandemic. Prices of crude oil and vegetable oil (both of which are major exports in the global market) shot up, while metal prices were at a 10-year high along with rising freight costs and overall food prices.
As per predictions by Deutsche Bank, India’s headline retail inflation is likely to rise further to a five-month high of 7.4 percent in September, due to the rising prices of food and vegetables. Experts also state that the RBI is likely to raise interest rates for the fourth time in a row on 30th September in order to help lower inflationary pressures on the economy.
Highest unemployment rate recorded in August
In 2022 so far, the highest rate of unemployment was recorded in August at 8.28 per cent, while the lowest rate was recorded at the beginning of the year in January at 6.56 per cent. Overall, the average rate of unemployment in 2021 was 5.98 per cent, while the number was 8 per cent in 2020. The unemployment rate recorded in August was the highest it has been in a year. For the same month, the employment rate also declined from 37.6 per cent to 37.3 per cent. As per data by the Centre for Monitoring Indian Economy Pvt. Ltd. (CMIE), the unemployment rate in urban areas (around 8 per cent) is usually higher than that in rural areas (around 7 per cent). However, for the month of August, the unemployment rate in urban areas was around 9.6 per cent, while the rural unemployment rate was around 7.7 per cent. While unemployment varies significantly by state, the highest rates were recorded in Haryana at 37.3 per cent, followed by Jammu and Kashmir at 32.8 per cent, Rajasthan at 31.4 per cent, Jharkhand at 17.3 per cent, and Tripura at 16.3 per cent.
CMIE data also revealed that the decline in the labour market is due to a decline in salaried jobs along with an increase in the number in the labour force. As per the data, for the month of August, the Indian labour force grew by 4 million, while the labour market lost around 2.1 million jobs, causing an increase in the total unemployed to 35.6 million. It is important to note that the overall decline in salaried jobs in particular stands at 4.6 million, the lowest it has been in 15 months. The agricultural sector also lost 11 million jobs in the month of August. However, non-farm services and informal jobs increased by around 2 million. Given the onset of the festive season, salaried jobs are expected to rise back up to over 80 million in September, which is predicted to absorb the growth in the labour force.
Will the rupee continue to decline?
On 26th September, the rupee depreciated to an all-time low of 81.50 against the US dollar as markets closed on Monday. The average exchange rate for the US dollar in 2022 was at around 74.13 rupees, while in 2021 this was at around 73.9 rupees. However, so far in 2022, the average exchange rate has gone up to 78.29 rupees. The decline of the rupee against the US dollar is not isolated, it comes in line with the massive fall of global currencies against the dollar continuing in the global market. The value of the US dollar against other major currencies has reached the highest level since the early 2000s. The major reason for this is the high rate of interest being offered by the Federal Reserve in order to combat inflationary pressures in the United States economy.
In a written statement to the parliament in July earlier this year, Indian Finance Minister Nirmala Sitharaman attributed the rupee’s fall to various external factors such as the ongoing Russia-Ukraine war, increasing prices of crude oil and the tightening of global financial conditions. The depreciation of the Indian rupee can be attributed to these factors. As per the Japanese financial holding company Nomura, for every $1 increase in the price of oil, India’s import bill increases by $2.1 billion. Market analysts from the investment bank Goldman Sachs predict that as geopolitical conditions continue to remain unpredictable in the next few months and the Federal Reserve continues tightening its policy, the rupee will likely continue weakening in the next few months. The bank forecasts the Indian currency will continue to be in the 80-81 range per dollar for the next three to six months.
For the 2022-23 financial year, the International Monetary Fund (IMF) predicted a growth forecast of 9 per cent, while the Economic Survey announced in February 2022, pegged the same at 8-8.5 per cent. However, following the first quarter of the financial year, the IMF cut down this estimate to 8.2 per cent in April and then further to 7.4 per cent in July 2022. Several other banks, including Goldman Sachs have lowered the economic growth predictions for India from 7.2 per cent to 7 per cent, while the Asian Development Bank (ADB) has also slashed predictions to the same.
The Governor of the Reserve Bank of India (RBI) Shaktikanta Das, has strongly maintained his forecast of 7.2 per cent GDP growth rate for the 2022-23 financial year. A combination of factors, including rising interest rates to combat inflation, uneven monsoon season, and overall global slowdown in economic growth are all likely to continue to have an impact on the growth of the Indian economy in the next few months.
Himachal 2022: BJP vs INC
Elections to the 68-member Legislative Assembly in Himachal Pradesh are scheduled to take place in November this year. The state, which has widespread anti-incumbency, has not allowed any party to be re-elected to power since 1985. The Bharatiya Janata Party (BJP), which won the state in 2017, securing 44 seats and a vote share of 48.79 per cent, is hoping to win again this time. The party has said that it will be the first in 37 years to be reelected in the state, due to the development work done under the tenure of the incumbent Chief Minister. Politics in the state has been largely bipolar, with a shift in governments from the Indian National Congress (INC) and the BJP with every successive election. The INC, which won 21 seats in the 2017 elections, managed to retain a majority of its vote share, despite not being re-elected to power. The party is focusing its campaign on the failures of the BJP. However, internal factionalism in the party created by the power vacuum after the demise of former Chief Minister Virbhadra Singh is a hindrance to the party’s efficient victory in the state. Issues such as rising inflation, unemployment, lack of fair price of fruits, and caste inequality are the major facets voters are focusing on in the upcoming elections.
BJP ‘creating history’?
The BJP’s overall narrative will be centred around the development of Himachal Pradesh carried out by the state government in the past term with the support of the central government. The party is engaging in micro-level planning to reach voters through its various party wings at the booth level in the run-up to the Assembly polls. All key party wings, including the Bharatiya Janata Yuva Morcha, Kisan Morcha, Mahila Morcha, and Scheduled Caste Morcha are working at the booth level to educate voters about the government’s achievements. They’re also emphasising the welfare schemes launched by the government in order to garner support for the party. The BJP launched its “One Booth 20 Youth” campaign aiming to connect with 20 youth at each of the 7,500 polling booths in the state, in an attempt to win them over ahead of the polls.
While the party will be contesting the elections under the leadership of incumbent Chief Minister Jai Ram Thakur, it has announced the Chief Ministerial candidate will only be declared after the results of the Assembly elections have come through. This is perhaps to avoid a repeat of 2017, when, despite the party winning a majority, the BJP’s Chief Minister candidate Prem Kumal Dhumal was defeated.
During the 2017 elections, the party’s vision document included promises such as tackling forest mafia, illegal mining, and improving women’s safety. Although the party is yet to launch its official manifesto for 2022, it is likely to base its campaign on the schemes promised by the incumbent government during the 2022-23 budget session. This includes employment schemes, subsidies on 125 units of electricity, free water supply in rural areas, and reduced bus fares for women. The party will be taking suggestions from the general electorate for its manifesto and has set up a team of 21 subcommittees to seek suggestions and set up a web portal for the same.
It should be noted, however. that the BJP lost all four by-poll elections held in the state in October last year. Political analysts stated that the results of the by-polls were affected by rising resentment against the incumbent government, in part due to issues such as poor governance, rising prices, and rising unemployment.
INC: Attempt To Return
The Congress, led by state party president Kuldeep Singh Rathore, kickstarted a statewide padayatra and voter awareness campaign to consolidate its support base for the upcoming elections. The INC, motivated by their win across three Assembly seats and one Lok Sabha seat during the 2021 by-polls, is focusing its campaign narrative on the failures of the BJP government in the past term. The party is reaching out to the public to spread awareness about the INC’s ideologies and policies.
INC’s promises include addressing the pressing issues of inflation and unemployment, both of which are at its peak in the state. Party Chief Pratibha Singh has promised five lakh jobs if the party is voted to power in the state. Other promises include 300 units of free electricity and a 1,500 monthly allowance for women. The party has promised to implement the Old Pension Scheme (OPS) within ten days of being re-elected, along with an implementation of fair prices for crops and fruits, free mobile clinics, and the establishment of English-medium schools in each constituency.
However, despite these attempts, with the power vacuum left in the state after the demise of former Chief Minister Virbhadra Singh in 2021 and the factionalism within the party, the INC faces difficult times ahead trying to defeat the election machinery of the BJP in the state. After the demise of Virbhadra Singh, the BJP reshuffled its organisational structure, and made Pratibha Singh, the wife of former Chief Minister late Virbhadra Singh, the state president. The move has given rise to further factionalism in the party.
What are the major issues for voters?
One of the major issues in the state has been the unequal development across social groups in the state. Those belonging to Scheduled Tribe (ST) and Scheduled Caste (SC) groups record lower than average rates of education and schooling and are lacking in access to basic amenities and job opportunities. There is also a rural-urban divide in access to drinking water, sanitation, and electricity.
The state records a very high unemployment rate, with 8.82 lakh people being unemployed in March 2022. Other major issues include the demand for the implementation of the OPS, which has led to a major conflict between the government employees, who make up over two lakh of the population. Parties are also using issues of caste and religion, including the passing of the forced-conversion bill earlier this year, and the granting of ST status to members of the Hatti community to sway votes in their favour for the upcoming polls.
The Aam Aadmi Party (AAP), motivated by its victory in nbouring Punjab, is attempting to make inroads in the hill state. The party is offering its “Delhi Model” of governance, including the promise of freebies such as water and electricity, in an attempt to woo voters in the state. However, despite their attempts, the 2022 polls are likely to be a tough fight primarily between the INC and the BJP in Himachal Pradesh.
DEMAND FOR A SEVENTH EXTENSION: WHAT ARE STATES ASKING FOR?
The sixth phase of the Pradhan Mantri Garib Kalyan Anna Yojana is slated to expire on 30th September 2022. Gujarat, with a BJP government, and Rajasthan, with a Congress government, are requesting an extension of the scheme beyond its September 2022 deadline. Gujarat Food & Civil Supply Minister Naresh Patel is likely to request the Central government to extend the scheme till Diwali (October 2022).
Rajasthan’s Minister for Food and Civil Supplies Pratap Singh Khachariyawas clearly demanded the Centre must continue the PMGK Anna Yojana beyond September and also urged the Centre to increase the limit for the number of NFSA beneficiaries for states.
According to Khachariyawas, an upper cap set by the Centre on the number of beneficiaries has severely constrained states’ abilities to help those in need of free grains. This is even as, in cumulative terms, the states have failed to distribute the entirety of the Centre’s allocation of foodgrains.
Uttar Pradesh, with BJP’s Yogi Adiyanath at the helm and Bihar, which recently witnessed a breakup of the ruling National Democratic Alliance (NDA) government, has left it to the Centre to take a final decision on the extension of the Union government scheme.
Punjab and Maharashtra too are willing to follow the Centre’s lead on it. Several other states like Chhattisgarh, Andhra Pradesh, and Telangana are likely to extend the scheme as they already have their own free foodgrains scheme and have claimed they would continue to distribute foodgrains free even if the Centre ends the scheme come September.
WHY AN EXTENSION IS UNLIKELY
Retail inflation in India, measured by the consumer price index (CPI), spiked to 7 per cent in August 2022, up from 6.71 per cent in July even as wholesale inflation in India (measured by the Wholesale Price Index) eased from 13.93 per cent in July 2022 to 12.41 per cent in August.
According to analysts, a rise in the consumer price index, that directly affects the local consumer, would add to the woes of the vulnerable sections. In this scenario, when inflationary pressures are likely to burden household budgets, a scheme such as the Pradhan Mantri Garib Kalyan Anna Yojana may help mitigate the impact of rising prices, especially food bills that take up a large share of the income of households below the poverty line.
However, it is noteworthy that the Centre’s decision to extend the PM-GKAY is not dependent solely on rising prices or the subsidy bill. While deciding on the extension of the scheme, the central government is factoring in the availability of foodgrains stocks in the central pool in light of the weak monsoon and consequent loss of crops.
According to the Ministry of Consumer Affairs, Food and Public Distribution, the scheme was extended to September 2022 and is most likely to go up till March 2023, as demanded by several states, which may have an adverse impact on the rice stock in the central pool.
POOR MONSOON AND BURDEN ON GOVERNMENT FOOD GRAIN STOCKS
The burden on the government stocks in the form of increased demand to allocate grains may drop the buffer stock of rice by 22 lakh tonnes thereby costing the exchequer around Rs. 90,000 crore in subsidy.
The scheme has already cost nearly Rs. 2.6 lakh crore since its inception in 2020. Rice stocks of the FCI, in charge of procuring and maintaining foodgrains for the central government, are estimated to be 11.4 million tonnes (mt) in April 2023, against the buffer norm of 13.6 mt, if the free foodgrain scheme is extended. The wheat stock may fall to 9 mt against the buffer of 7.4 mt on 1st April. Recent drought-like conditions in several states due to a poor monsoon have impacted rice production thereby increasing pressure on the country’s wheat stocks.
Indicating the Centre’s unwillingness to extend the scheme, in a statement as early as June 2022, the Expenditure Department of the Union government said, “The free food grain for poor scheme PM-GKAY should not be extended beyond September as it could strain government finances.” Further reinforcing the benefits the scheme has brought, the Department also said the high food security cover has already “created a serious fiscal situation” and is not needed in non-pandemic times.
Source: PIB and Indian Express
PHASE-WISE ALLOCATION AND DISTRIBUTION
The scheme has witnessed large-scale allocation of foodgrains from the central government’s Food Corporation of India (FCI) pool to states. In phases I to V of the scheme, the Department of Food and Public Distribution (DFPD) allocated a total of 759 lakh Metric Tonnes (LMT) foodgrains to states and Union Territories (UTs) for distribution to around 80 crore NFSA beneficiaries.
However, of the 759 LMT foodgrains allocated to the states and UTs, a cumulative total of about 580 LMT of foodgrains was distributed to the beneficiaries in the first five phases. Cumulatively, a total of 1,003 LMT food grains have been allocated by the Centre in all six phases of which 824 LMT was distributed up till 31st July 2022. There is a clear gap between the foodgrains allocated by the Centre’s assessment of the public need and that which was effectively distributed and / or availed by the beneficiaries. The foodgrains are distributed free of cost and have entailed a fiscal bill upwards of Rs. 2.79 lakh crore in food subsidy till 31st July 2022 for the six phases.
States have recorded varying successes in the distribution of food grains. While Mizoram, Meghalaya, Arunachal Pradesh, and Sikkim were rated the best performing states in the first two phases of the scheme, Chhattisgarh, Tripura, Mizoram, Delhi, and West Bengal topped the list by the end of the third and the fourth phases. While some in the government claim that the scheme’s extension five times was proof in itself of its success, the COVID-19-induced loss of livelihood and income, accompanied by a drop in the country’s ranking in the Global Hunger Index (from 94 in 2020 to 101 in 2021), point towards the scheme’s inability to provide food security and support to the lowest income groups.
SOURCE: DNA INDIA
PM GARIB KALYAN ANNA YOJANA: A SEVENTH EXTENSION UNLIKELY?
Meant to provide support to the most vulnerable sections of society during the first COVID-19 lockdown in March 2020, the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) has come to witness several extensions over the last two years. The scheme is currently in its sixth phase and provides free foodgrains to the poor, as well as migrants, with the intended purpose of ensuring food security and providing relief to low-income households affected by the pandemic.
It falls under the umbrella of the Pradhan Mantri Garib Kalyan Package, which was also launched during the first lockdown. The scheme provides an additional five kilograms (kg) of free foodgrains (wheat or rice) to every person covered under the National Food Security Act (NFSA), 2013 over and above the pre-existing five kg of subsidised foodgrain available through the Public Distribution System (PDS).
Targeting upwards of 80 crore beneficiaries under NFSA across the country, the scheme was initially announced for three months from April 2020 to June 2020. It has been extended several times since then and its sixth phase will end on 30th September 2022.
However, with increasing demand for an extension from states across the country, premised on both the continued impact of the pandemic and its deadly waves on citizens, keeping in mind the scheme’s impact on the upcoming state polls, the ball lies in the centre’s court on extending the scheme for another term.
IMPROVING FOOD SECURITY
With an ongoing debate on the distribution of ‘freebies’ or public goods and services free of cost to certain sections of society, the benefits of distributing free grains under the PM-GKAY have also come under the scanner. On one hand, there are reports and surveys, either commissioned or cited by the government, which point towards the benefits of the scheme; several other independent surveys highlight its failings in reaching a larger section of society in need of government support.
A survey commissioned by the Ministry of Consumer Affairs, Food and Public Distribution and conducted by Dalberg claims the scheme has shown high levels of satisfaction among beneficiaries. Another survey conducted in July 2021 by Microsave Consulting (funded by the Bill & Melinda Gates Foundation) and cited by the government, reported that an average of 94 per cent of households received free ration on a monthly basis. The survey was undertaken in 88 districts across the country.
However, not all surveys refer to the scheme and its impact positively. Independent surveys, conducted to assess the benefits of the scheme for low-income groups who are said to have borne a larger brunt of the pandemic, paint a grim picture. Findings from one such survey conducted by Azim Premji University, indicate that more than 68 per cent of households did not receive the free foodgrains assured under the scheme. Conducted by the Centre of Sustainable Employment at the University, the survey went on to report that only 27 per cent of the eligible households reported receiving the full benefits under the larger Pradhan Mantri Garib Kalyan Yojana, the parent scheme of the PM-GKAY. Findings of a survey conducted by the Right to Food Campaign (RTFC) and the Centre for Equity Studies’ Hunger Watch further the argument against the PM-GKAY’s ability to provide food security to the needy. Released in December 2020, the survey noted that 45 per cent of respondents found their need to borrow money to purchase food had increased in September-October 2020 compared to pre-pandemic times. According to the same survey, about 27 per cent of respondents sometimes went to bed without eating. The survey was conducted in 11 states in India from September to October 2020, five months after the government lifted the first lockdown imposed in March and continuing up to May 2020.
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