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THE INDIAN ECONOMY IN 2021: YEAR IN REVIEW

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At the beginning of 2021, as the Indian economy had just begun to recover from the devastating impact of the first wave of the COVID-19 pandemic, towards the end of March, the second wave of infections took over the country, prompting localised lockdowns across the country. The economy, battered by the impact of the first wave, had recorded the biggest contraction in economic growth in almost 40 years. As the second wave of the pandemic surged across the country, it was much deadlier than the first. However, for the Indian economy, the overall shock of the second wave across many indicators has been weaker than the second wave. Since the summer of 2021, growth in the country has recovered, due to high demand for exports and overall consumer demand. Similarly, the continued decline in COVID-19 cases, combined with an increase in the rate of vaccination, has prompted greater consumer confidence. Other overall positive signs of recovery in the Indian economy include a revival of the manufacturing sector and record agricultural production. However, some indicators, including the unemployment rate and labour force participation rate, paint a worrisome picture with the impact of the second wave, particularly on the structure of employment in the country. Let us have a look at some of the major economic indicators, including Gross Domestic Product (GDP), retail inflation, unemployment, Labour Force Participation Rate (LFPR,) and the trade deficit to see how the Indian economy has performed so far in 2021.

In manufacturing, some of the most affected industries have been metals and chemical products, motor vehicles, machinery and equipment, textiles.
Source: Creative Commons | nevil zaveri
The average wage growth for the agriculture sector for the period of November 2020 to March 2021 reduced to 2.9 percent (2nd wave) from 8.5 percent in April to August 2020 (1st wave).
Source: Creative Commons | CIDSE – together for global justice

INFLATION IN 2021: FLUCTUATING INDICATOR

As per inflation data released by the Ministry of Statistics and Programme Implementation on 13 December, India’s benchmark inflation rate, measured by the Consumer Price Index (CPI), firmed up to 4.91% year-on-year in November. Given this, the inflation rate of the country has remained at the tolerance level of 2%-6% for five consecutive months this year.

At the beginning of the year, as overall COVID-19 cases began to subside and the economy started showing signs of recovery, inflation in the first four months of the year stood well within the RBI’s target of 2%-6%. However, towards the end of March, as the number of COVID-19 cases began to rise in the country, states and governments decided to impose stringent lockdowns which disrupted the movement of goods and services, thereby having a direct impact on the inflation rate. Following the second wave and its effect on supply chains, inflation rates climbed to 6.3% in May and 6.26% in June. The continued increase in prices of food and fuel put pressure on both businesses and households, sparking protests across the country.

After August, as the economy began to gradually open up and recover, the inflation rate also subsided, touching 4.35% in September, the lowest retail inflation recorded since April 2021. Economists suggested that the decline in food prices, particularly of vegetables and cereals helped ease the inflationary pressure. Additionally, a good monsoon season, resumption of agriculture supply chains and administrative steps such as low import duties on edible oils all contributed to the lowering of inflation. The Reserve Bank of India (RBI) MPC expects the increase in vegetable prices to reverse with the winter arrivals and expects CPI at 5.1% for the third quarter and 5.7% for the fourth quarter of this financial year.

Overall, food inflation fell significantly from above 5% at the start of the current financial year to 0.7% in September 2021. During the same period, fuel inflation rose from 8% to 13.6%. While overall inflation declined for all income classes in this fiscal year 2021-22 compared with the last, the urban poor (bottom 20%) bore the heaviest brunt in both time periods.

ECONOMIC GROWTH: RECOVERY YEAR

In May 2021, the National Statistical Office (NSO) released numbers for the overall changes in Gross Domestic Product (GDP) for the fiscal year 2020-21 which showcased that the Indian economy contracted by a whopping 7.3 per cent. This was the most severe contraction in the economy since Indian Independence and India had been among the world’s major economies to be hit hardest by the pandemic. The impact of the first wave of the pandemic was felt in each sector of the economy and many anticipated that the second wave of the pandemic was likely to have an even more devastating impact on the Indian economy.

Indian GDP actually grew by 1.6 per cent in the January-March period, up from 0.5 per cent in the previous quarter when India began pulling out of a steep pandemic-induced recession in the previous six months. Similarly, GDP actually grew by 20.1% for the April to June quarter in 2021 compared to a year earlier. During the same period last year, India’s economy shrank by 24%. Overall projects for economic growth for the country for the 2022 financial year have been dented due to the low base of 7.3% contraction (2020-21). However, various economic analysts and brokerage houses have already revised their estimates for the economic growth figures for 2022 due to a rise in consumer spending, a fall in COVID-19 cases and an increased speed of vaccination.

For instance, Goldman Sachs revised its projections for Indian GDP from 8% to 9.1% for the 2022 financial year. Similarly, SBI Research increased its forecast of GDP growth to 9.3-9.6% for 2022 from its earlier prediction of 8.5-9%. Similarly, the RBI has also announced that the GDP growth target for this year is likely to be around 9.5%. It can be said that overall, the impact of the second wave of COVID-19 on economic growth was less severe as compared to the first wave. Although the economy suffered, localised lockdowns instead of national lockdowns and greater activity across crucial sectors reduced overall economic damage

INDIA’S TRADE FIGURES SHOW RESILIENCE IN 2021.

Overall, United Nations data indicates that India is one of the few countries that has performed better than major economies in the world in terms of trade in the first quarter of 2021. While the import of goods grew by 45% in the first quarter over the year 2021, exports grew by 26%. Overall, India’s exports in April 2021 were recorded at $30.63 billion, as compared to $10.36 billion in April 2020, exhibiting a growth of 195.72%. Even after the second COVID-19 wave hit the country, India’s merchandise trade has shown resilience. Exports rose in June 2021 by 48.3 per cent to $32.5 billion compared to June 2020. These are also the second-highest monthly exports recorded by the country so far. Experts suggest that the growth in merchandise exports was due to the rising demand from various developed countries where the impact of COVID-19 had already started to decline during this period.

Overall, India’s merchandise trade deficit widened to a record $22.59 billion in September, the highest in at least about 14 years led by engineering goods, petroleum products, plastics, and cotton yarn. India’s merchandise exports increased for the twelfth consecutive month in November and grew 26.49% this year at $29.88 billion. However, sequentially, exports declined 16% to $29.88 billion in November from $35.65 billion. Official data also showed a 57.18% rise in imports leaving an all-time trade deficit of $23.27 billion compared to $10.19 billion in November 2020.

In 2021, while tractor exports hit a historic high, domestic sales declined. Price hikes
by tractor manufacturers seem to have affected the demand.
Source: Wikimedia commons

UNEMPLOYMENT IN 2021: WORRISOME PICTURE

Earlier in the year, prior to the onslaught of the second wave of the COVID-19 pandemic as per the Periodic Labour Force Surveys (PLFS) data, available for January-March 2021, the unemployment rate in urban India was 9.4%. While this figure was lower than the previous quarter (10.3%), it was 0.3 % higher than the figure recorded for the same quarter in 2020, prior to the first wave of the pandemic. Youth unemployment continued to be high across states in the first quarter, a continuing trend that has been visible since 2020 in the 15-29 years age group.

India’s unemployment rate rose to its highest level since 1991 during 2020 as the pandemic caused the economy to come to a screeching halt, according to a study.
Source: Wikimedia Commons
State governments across India had tightened the restrictions on mobility in May 2021 to arrest the spread of Covid-19 infections. This took a big toll on industries and manufacturing.
Source: Wikimedia Commons

During the first nationwide lockdown announced in March 2020 following the first spike in COVID-19 cases, the unemployment rate touched a record high of 23.5% in May 2020 (the highest since 1991). In 2021, although a nationwide lockdown was not announced, all state governments announced lockdowns and during the second wave, the economic impact of lockdown was felt in rural areas as much as in urban areas. The unemployment rate, which had steadily been declining in the first quarter of the year, peaked in May 2021 at 11.84%, translating to job losses for roughly one crore Indians during the second wave of the pandemic.

June onwards, the second wave of COVID-19 has ebbed and restrictions on mobility have reduced. Correspondingly, labour markets have started improving slowly and the unemployment rate lowered to 6.96% in July. However, this was a short respite as the rate bounced back in August and touched 8.3%. As per data by the Centre for Monitoring Indian Economy, this was primarily driven by losses in farm jobs due to the seasonal nature of employment and uncertainty caused this year by an erratic monsoon season. According to the latest CMIE figures, as of November, the unemployment rate in the country has declined from 7.75% in October to 7% in November, painting a hopeful picture for the upcoming year.

However, more importantly, the Labour Force Participation Rate (LFPR) of the country, which measures the proportion of a country’s working-age population that engages actively in the labour market, has fallen structurally during the course of the pandemic, painting a worrisome picture. The two COVID-19 waves have lowered the LFPR to around 40% as compared to 43% prior to the pandemic. According to a World Bank modelled ILO estimate for LFPR, India’s LFPR should be around 46%, with global LPR being around 58.6%. A falling LFPR indicates that there are fewer people in the job market, and for India, most of them happen to be women. According to World Bank estimates, India has one of the lowest female labour force participation rates in the world. Overall data from CMIE showcases that compared to the pre-pandemic level, the likelihood of women being employed is 9.5 percentage points lower than that of men, indicating a widening gender gap in employment.

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Statistically Speaking

Synergising Logistics in India to cut costs

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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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Statistically Speaking

Himachal 2022: BJP vs INC

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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.

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Statistically Speaking

DEMAND FOR A SEVENTH EXTENSION: WHAT ARE STATES ASKING FOR?

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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

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Statistically Speaking

PHASE-WISE ALLOCATION AND DISTRIBUTION

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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

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Statistically Speaking

PM GARIB KALYAN ANNA YOJANA: A SEVENTH EXTENSION UNLIKELY?

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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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Environmentally Speaking

Delhi, Punjab plans to jointly pay incentives to cut stubble burning

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After the Union government turned down their request for funds, the governments of Punjab and Delhi are working on finalising a monetary incentive for farmers who do not burn their paddy residue after harvesting, according to the officials.

The incentive, which was initially set at 2,500 per acre, is likely to be reduced to 1,000 per acre as a result of the Centre’s decision. The scheme will be critical in efforts to discourage farmers from burning crop residue after harvest, which is a convenient way for them to clear fields but produces clouds of smoke that cause the world’s worst air pollution crisis in much of North India.

“We had sought the support of 1,125 crores from the Union government in the total outlay of 1,875 crores while 375 crores each was to be contributed by Punjab and Delhi governments. Now, we have received a communication from the ministry of agriculture that our proposal has been rejected,” said Punjab chief secretary VK Janjua.

The chief secretary added that the states are still negotiating the incentive, which could now be reduced to $1,000 per acre. The Punjab government has set aside 200 crores in its budget this year to combat stubble burning.

On Friday, the Union Agriculture Ministry did not immediately respond to requests for comment.

Officials from the Delhi government did not reveal how they planned to encourage farmers not to burn the residue.

However, officials who requested anonymity said they have already begun planning to spray a bio-decomposer solution free of charge across Basmati and non-Basmati fields in Delhi. The solution, developed by the Indian Agricultural Research Institute (IARI) in Pusa, naturally decomposes paddy straw in 15-30 days, eliminating the need for it to be burned.

Delhi’s environment and development minister, Gopal Rai, chaired a review meeting on Thursday to assess preparations for the event, and the agriculture department was asked to get farmers in Delhi to fill out a form as soon as possible to identify fields that need to be sprayed.

Stubble burning and finding a solution to it is one of the 15 key focus areas identified by the Delhi government for its winter air pollution action plan.

However, convincing farmers in Punjab to abandon the practice appears to be the most pressing issue.

During the Kharif season, nearly three million hectares of paddy are planted in Punjab. Every year, the state produces approximately 18.5 million tonnes of paddy crop residue. 49% of this is managed in situ (mixing the residue into the soil) and ex-situ (used as fuel), with the remainder set ablaze.

Most farmers burn the residue because it is a quick and inexpensive way to clear the fields for the sowing of the rabi season wheat crop, which has a very short window.

As a result, Delhi and its surrounding areas have dangerously high levels of air pollution.

“The agriculture ministry has rejected our proposal citing that 275 crores have already been sanctioned for supplying subsidised machines for in-situ management of paddy straw,” said an official in Punjab’s agriculture department who was present at the meetings with central officials. Farmers will receive 32,100 more subsidised machines thanks to the funds allocated.

At least 90,000 machines have been supplied to farmers in Punjab over the last four seasons, with the Centre releasing 269 crores, 273 crores, 272 crores, and 331 crores in 2018, 2019, 2020, and 2021, respectively.

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