Volume 11, Number 1 ISSN 0975-2382 Uttar Pradesh ... DELHI JOURNALS 2018 15-12-2018.pdfLee Kuan Yew...

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The foundation stone of the association was laid on 25th February 2005 with its first formal meeting held at Udai Pratap Autonomous P.G. College, Varanasi presided over by Dr. M. Muzammil, Professor of Economics. The Association was founded by “Arthik Adhyayan Evam Shodh Vikas Samiti” functioning as Uttar Pradesh-Uttarakhand Chapter of Indian Economic Association - IEA, and is registered under society registration act. UPUEA has its independent membership, constitution, fund and the management system.The UPUEA organizes every year an annual conference of membership, which discusses contemporary economic problems. Besides, it promotes original research in the area of regional economic issues, on whole of U.P. and Uttarakhand, or on area specific problem. It publishes a bi-annual-bilingual economic journal.The UPUEA sponsors or arranges sponsorship to research project undertaken by members on disciplinary or trans disciplinary economic issues to add to the knowledge and to facilitate development of the region. It also supports and encourages the members to organize seminars, symposia, workshops and training courses for professional economists.

Uttar Pradesh-Uttarakhand Economic Association(Reg. No. 1136/2005-06)

www.upuea.org

OFFICE BEARERS

Association PresidentProf. Ravi SrivasatavaCSRD, JNU, New Delhi

Executive PresidentProf. Ashok MittalAMU, Aligarh

Prof. P.S. BishtKumaun University, Nainital

President 14th Conference (2018)Prof. Jagdish NarayanAllahabad University, Allahabad

Vice PresidentsDr. A.K. TomarDirector, Lal Bahadur ShastriWomen's College, Aligarh

Prof. Pradeep Kumar PandeyM.G. Kashi Vidyapeeth, Varanasi

Dr. Dushyant KumarMeerut University, Meerut

TreasurerDr. Anoop Kumar MishraDAV College, Varanasi

Joint SecretariesProf. M.C. SatiHNB Garhwal University,Srinagar, U.K.

Prof. C.B. SinghBundelkhand University, Jhansi

Dr. Vinod Kumar SrivastavaRML Awadh University, Faizabad

Editor in ChiefProf. P.K. ChaubeyFormer Director, IMS, Lucknow University, Lucknow

General SecretaryProf. S.K. MishraPt. Deendayal Upadhyay Chair,BHU, Varanasi

REGIONAL COORDINATORS

Dr. Angraj SinghPilibhit (Rohilkhand)

Prof. V.P. TripathiAgra University, (Western U.P.)

Dr. B.B. TiwariLucknow (Central U.P.)

Dr. Birendra SinghTibettan Central University,(Eastern U.P.)

Dr. U.R. YadavJhansi (Bundelkhand)

Dr. V.B. ChaurasiaDAV College, Dehradun,(Uttarakhand)

UPUEA ECONOMIC JOURNALA Biannual-Bilingual Refereed Journal of Economics

Volume 11, Number 1

April 2018

ISSN 0975-2382

UPBIL/2008/26430

ARTICLES

•

Kirit S. Parikh

• Economic Journey of India: Issues in the Making of a New India

I.D. Gupta

• Monetary Policy and Inflation in India: A Study of Recent Past

Indranil Chowdhury

• Assessment of Climate Induced Vulnerability in Bundelkhand Region, India: An

Application of Indicator Based Approach

Surendra Singh & Alka Singh

• Measuring the Stance of Monetary Policy for India

Gyanendra Pratap Singh

• Microfinance Institutions in Contemporary Economic Scenario : A Study of Women

Empowerment through SHGs with Special Reference to Uttar Pradesh

Garima Singh & Anamika Choudhary

• Do Fiscal Sustainability Measures Augment growth Process in India?

Swati Jain

• Governance for Happiness

P.K. Chaubey

• Identity Crisis and National Register for Citizens in Assam

Roli Misra & Shipra Srivastava

•

Jhjke vxzoky

BOOK REVIEW

• Patterns of Development

I.D. Gupta

• A World of Three Zeros

Masroor Ahmad Beg

Realizing Ambedkar’s Vision without Reservation in a World of Jobless Growth

,dkRe ekuorkokn&Hkkjrh; oSfnd thouewY;ksa dh vkèkqfud&laxr iquO;kZ[;k

Dr. Indu VarshneyD.S. PG College, Aligarh (Camp Office)

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The foundation stone of the association was laid on 25th February 2005 with its first formal meeting held at Udai Pratap Autonomous P.G. College, Varanasi presided over by Dr. M. Muzammil, Professor of Economics. The Association was founded by “Arthik Adhyayan Evam Shodh Vikas Samiti” functioning as Uttar Pradesh-Uttarakhand Chapter of Indian Economic Association - IEA, and is registered under society registration act. UPUEA has its independent membership, constitution, fund and the management system.The UPUEA organizes every year an annual conference of membership, which discusses contemporary economic problems. Besides, it promotes original research in the area of regional economic issues, on whole of U.P. and Uttarakhand, or on area specific problem. It publishes a bi-annual-bilingual economic journal.The UPUEA sponsors or arranges sponsorship to research project undertaken by members on disciplinary or trans disciplinary economic issues to add to the knowledge and to facilitate development of the region. It also supports and encourages the members to organize seminars, symposia, workshops and training courses for professional economists.

Uttar Pradesh-Uttarakhand Economic Association(Reg. No. 1136/2005-06)

www.upuea.org

OFFICE BEARERS

Association PresidentProf. Ravi SrivasatavaCSRD, JNU, New Delhi

Executive PresidentProf. Ashok MittalAMU, Aligarh

Prof. P.S. BishtKumaun University, Nainital

President 14th Conference (2018)Prof. Jagdish NarayanAllahabad University, Allahabad

Vice PresidentsDr. A.K. TomarDirector, Lal Bahadur ShastriWomen's College, Aligarh

Prof. Pradeep Kumar PandeyM.G. Kashi Vidyapeeth, Varanasi

Dr. Dushyant KumarMeerut University, Meerut

TreasurerDr. Anoop Kumar MishraDAV College, Varanasi

Joint SecretariesProf. M.C. SatiHNB Garhwal University,Srinagar, U.K.

Prof. C.B. SinghBundelkhand University, Jhansi

Dr. Vinod Kumar SrivastavaRML Awadh University, Faizabad

Editor in ChiefProf. P.K. ChaubeyFormer Director, IMS, Lucknow University, Lucknow

General SecretaryProf. S.K. MishraPt. Deendayal Upadhyay Chair,BHU, Varanasi

REGIONAL COORDINATORS

Dr. Angraj SinghPilibhit (Rohilkhand)

Prof. V.P. TripathiAgra University, (Western U.P.)

Dr. B.B. TiwariLucknow (Central U.P.)

Dr. Birendra SinghTibettan Central University,(Eastern U.P.)

Dr. U.R. YadavJhansi (Bundelkhand)

Dr. V.B. ChaurasiaDAV College, Dehradun,(Uttarakhand)

UPUEA ECONOMIC JOURNALA Biannual-Bilingual Refereed Journal of Economics

Volume 11, Number 1

April 2018

ISSN 0975-2382

UPBIL/2008/26430

ARTICLES

•

Kirit S. Parikh

• Economic Journey of India: Issues in the Making of a New India

I.D. Gupta

• Monetary Policy and Inflation in India: A Study of Recent Past

Indranil Chowdhury

• Assessment of Climate Induced Vulnerability in Bundelkhand Region, India: An


Surendra Singh & Alka Singh

• Measuring the Stance of Monetary Policy for India

Gyanendra Pratap Singh

• Microfinance Institutions in Contemporary Economic Scenario : A Study of Women

Empowerment through SHGs with Special Reference to Uttar Pradesh

Garima Singh & Anamika Choudhary

• Do Fiscal Sustainability Measures Augment Growth Process in India?

Swati Jain

• Governance for Happiness

P.K. Chaubey

• Identity Crisis and National Register for Citizens in Assam

Roli Misra & Shipra Srivastava

•

Jhjke vxzoky

BOOK REVIEW

• Patterns of Development

I.D. Gupta

• A World of Three Zeros

Masroor Ahmad Beg

Realizing Ambedkar’s Vision without Reservation in a World of Jobless Growth


Dr. Indu VarshneyD.S. PG College, Aligarh (Camp Office)

UPUEA ECONOMIC JOURNAL

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UPUEA ECONOMIC JOURNAL

Free circulation for Life Members of the Association.

Prof. S.P. SinghDepartment of Humanities & Social SciencesIndian Institute of Technology, Roorkee

Prof. A.K. GaurDepartment of Economics,Banaras Hindu University, Varanasi

Prof. Dinesh KumarDepartment of Economics,Chaudhary Charan Singh University, Meerut

Dr. Nomita KumarGiri Institute of Development Studies,Lucknow

Dr. Swati JainDepartment of Economics,University of Allahabad, Allahabad

Dr. Anamika ChoudharyDepartment of Economics,Dr. Shakuntala Misra NationalRehabilitation University, Lucknow

Prof. Amitabh KunduRIS, New Delhi

Prof. Umamaheswaran KalpagamGB Pant Social Science Institute, Allahabad

Prof. Suresh C. AggarwalDepartment of Business Economics,University of Delhi, Delhi

Prof. R. Sudarsana RaoDepartment of Economics,Andhra University, Visakhapatnam

Prof. Kiran PandyaSouth Gujarat University, Surat

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ISSN: 0975-2382VOLUME 11, Number 1, April 2018

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Contents

ARTICLES

1. Realizing Ambedkar’s Vision without Reservation in a 1World of Jobless GrowthKirit S. Parikh

2. Economic Journey of India: Issues in the Making of a New India 10I.D. Gupta

3. Monetary Policy and Inflation in India: A Study of Recent Past 20Indranil Chowdhury

4. Assessment of Climate Induced Vulnerability in Bundelkhand 41Region, India: An Application of Indicator Based ApproachSurendra Singh & Alka Singh

5. Measuring the Stance of Monetary Policy for India 50Gyanendra Pratap Singh

6. Microfinance Institutions in Contemporary Economic Scenario: 65A Study of Women Empowerment through SHGs withSpecial Reference to Uttar PradeshGarima Singh & Anamika Choudhary

7. Do Fiscal Sustainability Measures Augment Growth Process in India? 81Swati Jain

8. Governance for Happiness 95P.K. Chaubey

UPUEA Economic JournalVolume 11 Number 1 April 2018

4 UPUEA Economic Journal

9. Identity Crisis and National Register for Citizens in Assam 104Roli Misra & Shipra Srivastava

10. ,dkRe ekuorkokn&Hkkjrh; oSfnd thouewY;ksa dh vkèkqfud&laxr iquO;kZ[;k 112Jhjke vxzoky

BOOK REVIEW

1. Patterns of Development 123I.D. Gupta

2. A World of Three Zeros 125Masroor Ahmad Beg

Uttar Pradesh Uttarakhand Economic Association (UPUEA)Report, 13th Annual Conference held on 14th-15th October, 2017Department of Economics, Banking and FinanceBundelkhand University, Jhansi (Uttar Pradesh) 128R.P. Juyal

Editorial Policy 138

Certificate of Submission / Declaration of Non-Plagiarism 142

Executive Council 143

Members of the Executive Committee 144

Invited EC Members 144

Realizing Ambedkar's Vision withoutReservation in a World of Jobless Growth

Kirit S. Parikh*

ABSTRACT

Ambedkar wanted to create an equal society and for that purpose he made arather optimistic provision of reservation in the House of People and LegislativeAssembly but only for 10 years and created scope for positive discrimination bystate in favour of disadvantaged groups in the matters of education andemployment. The lot of the disadvantaged groups has improved quite a bit butequality is nowhere in sight despite extension of political reservation and positivediscrimination for over 65 years. Meanwhile it has given rise to resentment inseveral other groups and disharmony in the society while justice is not done tothe poor in non-reservation categories. It breads disincentives and fostersdifferentiation within disadvantaged groups. Reservation scheme is not self-liquidating. The paper argues for affirmative action in just and equitable waywithout resortingto reservations under certain assumptions. It is through provisionof quality education to each child while admission would be based scoresadjusted for the difference between innate nature and circumstances of nurture.

Introduction – Ambedkar’s VisionAmbedkar’s vision is reflected in India’s constitution. As I read it from variousarticles of the constitution, it is of “an equal society but with legacy of pastinjustice to be removed in 10 years”.This is clear if articles 15, 29 and 334 are read together clearly indicates amulti-cultural diverse equal society.Article 15

(1) The State shall not discriminate against any citizen on grounds only ofreligion, race, caste, sex, place of birth or any of them.

* Chairman, Integrated Research and Action for Development (IRADe), December 27,2016, Inaugural Lecture, Annual Conference of Indian Economic Association at Mathura.

ARTICLE 1

ISSN 0975-2382Volume 11, Number 1, April 2018


……

(4) Nothing in this article or in clause (2) of article 29 shall prevent theState from making any special provision for the advancement of anysocially and educationally backward classes of citizens or for the ScheduledCastes and the Scheduled Tribes.

Article 29 Protection of interests of minorities(1) Any section of the citizens residing in the territory of India or any part

thereof having a distinct language, script or culture of its own shall havethe right to conserve the same

(2) No citizen shall be denied admission into any educational institutionmaintained by the State or receiving aid out of State funds on groundsonly of religion, race, caste, language or any of them

Article 334 Reservation of seats and special representation to cease after tenyears“Notwithstanding anything in the foregoing provisions of this Part, theprovisions of this Constitution relating to—

(a) The reservation of seats for the Scheduled Castes and the ScheduledTribes in the House of the People and in the Legislative Assemblies of theStates; and

(b) The representation of the Anglo-Indian community in the House of thePeople and in the Legislative Assemblies of the States by nomination,

shall cease to have effect on the expiration of a period of ten years from thecommencement of this Constitution:Provided that nothing in this article shall affect any representation in the Houseof the People or in the Legislative Assembly of a State until the dissolution of thethen existing House or Assembly, as the case may be.”Article 334 of the Constitution had originally required the reservation of electedseats to cease in 1960, but this was extended to 26 January 1970 by the 8th

Amendment carried out in 1959. The period of reservation was extended to1980, 1990, 2000 and 2010 by the 23rd, 45th, 62nd, and 79th Amendments respectively.The 95th Amendment has extended the period of reservation to 2020.Gains from ReservationHowever, equality in 10 years was a very optimistic vision. Perhaps Ambedkarwas too modest and felt all are as smart as he was and that if an opportunityfor education is given they can overcome centuries of discrimination. This hasnot led to equality after 67 years even though reservation has providedsubstantial gains to SC and ST communities. Table 1 shows that while the

3Realizing Ambedkar's Vision without Reservation...

index of educational attainment has improved for the disadvantaged classesand the gains are generally better for them yet they are below the better offclass as reflected in the case of others in the table.

Table 1: Gains from Reservation Made but Equality not RealizedIndex of Educational Attainment for All-India**

Group 1983 2011

SC 2.9 8.4

ST 2.3 7.4

SCST 2.7 8.1

OBC 7.1* 10.7

Muslim 4.4 8.6

Others 7.0 15.3

ALL 5.7 10.8

* refers to 1999**Index reflects average number of schooling years, Source: Bhalla Surjit, (2016)

To what extent these educational gains reflected in employment is shown intable 2.

Table 2: SC Employment in 2012

Permanent Temporary Total

All govt. employees (lakhs) 154 102 256

of which SC (lakhs) 26 19 45

SC (%) 16.9 18.6 17.6

Source: Thorat, Tagade, and Naik (2016)

The share of SCs in government employment is slightly above SC share inpopulation even though there is no reservation for temporary jobs. In centralpublic services as seen in table 3, in 2011 the SCs have got their share inclass A and class B jobs, which are officers’ grades.

Table 3: SCs in Central Public Services by Grade: All India (%)Year Nos All A & B C & D Total

2004 867,732 19 12.2 87.8 100

2011 893,954 19.7 19.2 80.8 100

• Grades A and B are officers, C and D are lower levels• Grade D does not include safaikarmacharisSource: Thorat,Tagade, andNaik(2016)


The situation in private sector is different as there is no reservation for jobsthere. In private sector salaried employment share of SC is 15.7 % but inpermanent jobs it is only 7 % as can be seen in table 4. Thus the quality ofemployment for SCs is poor.

Table 4: SCs in Private Sector Non-farm Employment in 2011-12

Non-farm Employment Permanent Non-Permanent Total

All Private Sector Non-farm Salaried (lakhs) 34.6 565.4 600

of which SC (lakhs) 6.4 87.9 94.3

SC (%) 18.5 15.5 15.7

Source: Thorat, Tagade, and Naik (2016)

One may ask the question, why is there a low share of SCs in private sector?Possible explanations could be because in private sector there is no open andfair recruitment and it is often biased in favour of caste and family kins. Ordoes it reflect relative competence and that SCs have not caught up withothers as the level of schooling shows?A child of 3 years from sociallydisadvantaged family has a far smaller vocabulary and cognitive developmentthan a child of professional parents. This disadvantage persists in most casesfor the whole life. Only a few exceptional individuals can reach high levels.The list of high achievers shown in Box A shows that there have been veryfew persons with SC & ST back ground.

BOX A: Some High Achievers among SC & ST

• Dr. Bhimrao Ramji Ambedkar, Chairman, Drafting Committee of Constitution ofIndia

• K.G. Balakrishnan, Former Chief Justice of India• K.R. Narayanan, Former President of India• Mayawati, four time Chief Minister of Uttar Pradesh.• Dinanath Bhaskar, Former Health Minister and Former Chairman SC/ST Commission

Uttar Pradesh, Founder Member of Bahujan Samaj Party• Kanshi Ram, Founder of Bahujan Samaj Party• Damodaram Sanjivayya - 2nd Chief Minister of Andhra Pradesh (1960–1962) and

also the first dalit Chief Minister of a state in India and first dalit President ofIndian National Congress party (1962))

• Mallikarjun Kharge, Leader of the Indian National Congress in the Lok Sabha,Former Union Minister of Labour and Employment, Former Union Minister ofRailways

• Jagjivan Ram (1908–1986), first Labour Minister of India, former Defence Ministerof India, former Agriculture Minister of India, former Deputy Prime Minister ofIndia and father of Meira Kumar

• Dr. Narendra Jadhav, Member Planning Commission


Problems with ReservationWe have seen that only by 2011, 60 years after reservation some equality incentral services has been attained. It has taken two to three generations todo that. Though it has helped a lot but the disadvantage of poor backgroundcannot be overcome without quality education. The long time it has takenindicates that quality of education that SC & ST receive has not been adequate.The reservation does not cover other poor and disadvantaged groups as requiredby the constitution.Also reservation reduces incentives to perform to one’s best level. And eventhose who get admitted / promoted on merit may carry the stigma of unduepreferencedue to reservation.It also creates a sense of injustice and resentment among others as is evidentfrom the demand for reservation by Patidars in Gujarat, Jats in Haryana,Marathas in Maharashtra, andAhoms in Assam.There is also a fear among the more disadvantaged groups within SC/STsthat the creamy layers are capturing all the benefits. Since gaining somelevel of excellence may require two generations without high quality education,such capture may seem unavoidable. Nonetheless, a policy that has witheringaway of reservations over in an evolutionary way is desirable. Reservationsshould be self-liquidating. In our democratic polity reservation cannot beabolished with a bang but only with a whimper.

Affirmative Action without ReservationI suggest a way to provide affirmative action in a just and equitable waywithout reservation. For this admissions and promotions have to be based onone’s innate ability. The scheme I propose is based on the following assumptions:

• All Indians have the same genetic background and innate or naturalpotential.

• Performance depends on achievement which depends on naturalpotential and nurture.

• A person from a backward caste, with illiterate parents, who has grownup in a small village and is poor would not perform as well in anexamination or a test as another who is from an upper caste, hasprofessional parents, is rich and has gone to a good quality urbanschool, even when both of them have the same potential.

• Thus there is a need to adjust the test scores to account for the differencedue to nurture.


The question is how to measure innate potential or disadvantage of nurture.IQtests do not fully account for the disadvantage of nurture. Also IQ score canbe improved with practice.I suggest a way of measuring it. If the innate abilities of different groups arethe same then their achievement in a test will be normally distributed butaround different means. The difference between the means may be consideredthe outcome of disadvantage and should be given as handicap to all membersof the disadvantaged group.Consider a test taken by almost all, such as class 10 or class 12 examinations,taken by lakhs of students. We can separate people into different groups ofsay 1000 each. The groups can be based on caste, education of parents, income,place of schooling, religion, etc.The most advantaged group may be rich, upper caste, urban educated, graduateparents, professional parents etc. That group would have a mean score of sayM(A). The most disadvantaged group may be ST, poor, illiterate parents,daily wage labourers, rural small village school educated, etc. with meanscore of M(D).The difference between M(A) and M(D) can be considered as the disadvantageof nurture. So, to the marks of each member of the disadvantaged group, addthe difference M(A)-M(D) to obtain the adjusted innate or natural abilityscore. Then admit on the basis of merit reflected in the adjusted marks.Notice that we can keep creating more groups. Patels, Marathas, Jats, Ahomsandany other group that demands consideration can also be added. This could beused in all admissions.The advantages of this proposal are many.

• Over time creamy layer floats out.• The system will be self-liquidating.• If overcoming disadvantage takes generations then this will continue

to provide affirmative action for generations.• It will wipe the tears from the eyes of the most disadvantaged.• All are treated equally as the constitution provides.• It does not affect the incentive to do one’s best.


Creating Jobs and Eligibility in the ICT Driven World

The main objective behind demand for reservation is to get jobs and income.To-day government is looked upon as a preferred employer and there is ahuge clamour for government jobs. A government job provides security, demandsless work, is less stressful and at lower levels offers much higher emolumentsthan a private sector job. However, government cannot provide employmentto all in our growing population even when the economy grows at a robustrate. Thus, a major challenge facing the economy is creating employmentwhen the information, communication and technology revolutions are cuttingdown and transforming the number and nature of employment.India needs to generate 280 million jobs between now and 2050. Over 1991 to2013, despite high growth less than half the Indians who sought jobs gotthem; only 140 million out of 300 million got jobs. Working age population in2020 will be 869 million, world’s largest. But we face jobless growth. Up to93% of jobs will be in unorganised, insecure informal sector by 2017(UNDP, 2016).In 2015, India added the fewest organised-sector jobs—in large companiesand factories—in seven years across eight important industries. In 2015 leastjobs were added since 2009. Also as many as 60 % of those with jobs do notfind employment for the entire year in urban areas and 55 % in rural areasdo not get year round employment. Table 5 shows jobs added by sectors.

Table 5: Change in Manufacturing Employment in 2014-15 (Thousands)

Sector Total Sector Total

Textiles 144 Gems -38

Leather -16 Transport -8

Metals 74 IT/BPO 152

Automobiles -16 Handloom/ -22

Overall 270

Source: Ministry of Labour (2016)

The phenomenon of jobless growth is seen around the world and automationwill have a significant impact on the future of employment. Employmentgrowth is slowing down.Keynes predicted widespread technological unemployment “due to ourdiscovery of means of economising the use of labour outrunning the pace atwhich we can find new uses for labour” (Keynes, 1933).


Carl Benedikt Frey and Michael A. Osborne of Oxford University examined702 detailed occupations to estimate the probability of their computerization.They find that 47 % of jobs in USA and 35 % in UK are likely to be computerized.Table 6 shows the probability of computerization of different occupations.

Table 6: Probability of Computerization

Occupation Probability

Data Entry Keyers 0.99

Tax Preparers 0.99

Umpires and Referees 0.98

Industrial Truck Operators 0.94

Waiters and waitresses 0.94

Slaughterers 0.6

Economists 0.43

Judicial Law Clerks 0.41

Clergy 0.01

Choreographers 0

Source: Frey and Osborne (2013)

The McKinsey Global Institute assess susceptibility to computerization basedon time spent on different activities. This is shown in table 7.

Table 7: The probability of computerization depends on the time spent on differentactivities

Activity % Jobs Susceptibility Probability

Managing others 7% Least Susceptible 9%

Applying Expertise 14 Least Susceptible 18

Stakeholder interactions 16 Less Susceptible 20

Unpredictable physical work 12 Less Susceptible 25

Data collection 17 Highly Susceptible 64

Data processing 16 Highly Susceptible 69

Predictable physical work 18 Highly Susceptible 78

Source: Chui, Manyika, and Miremadi (2016)


One cannot get a job in the future just by expanding reservation. One needsto acquire right skills. This calls for quality education at all levels, beginningwith pre-primary level. We must use all the tools that IT provides to fullydevelop cognitive capacity of every child in the country. Only then can berealized Ambedkar’s vision of a just and equal society

ReferencesBhalla Surjit, (2016), “Caste Reservations: Half Pregnant Constitution, Half Pregnant

State”, in Shah Parth (ed.), Liberalism in India: Past, Present and Future, Centre forCivil Society.

ThoratSukhadeo, TagadeNitin, NaikAjaya K., “Prejudice against Reservation Policies: Howand Why?, Economic and Political Weekly, February 2016.

https:/journalistsresource.org/studies/society/education/child-cognitive-development-socioeconomic-status

Chui Michael, Manyika James, and Miremadi Mehdi (2016), “Where machines could replacehumans—and where they can’t (yet)”, McKinsey Global Institute, July 2016.

Ministry of Labour, (2016), Quarterly Report on Changes in Employment in Selected SectorsMarch 2016.

UNDP, (2016), Asia-Pacific Human Development Report, Shaping the Future: How Changingemographics and Power Human Development.

Frey Carl Benedikt and Osborne Michael A., (2013), “The Future of Employment: HowSusceptible Are Jobs To Computerisation?”

Keynes, J.M., (1933), “Economic possibilities for our grandchildren (1930)”, Essays inpersuasion, pp. 358–73.


Economic Journey of India: Issues in theMaking of a New India

I.D. Gupta*

ABSTRACT

Basic socio economic issues in making of new India are not so much economicor political rather they pertain to the man himself who is the mastermind ofall that happens. The mindset of the people in post-Independence India has notmoved in the desired direction which may fulfill the dreams of our nationbuilders. Existing issues of lop-sided development, inequality, widespreadcorruption and black money, political leaders’ falling standards etc. are alloutcomes of the mindset of the people of India. It is an issue of “our character”and its downfall over time.Deviations from the Constitutional mandate of establishment of a “SocialisticPattern of Society” particularly since 1990s, which took place under thecompulsions of BOP crisis and loss of credit worthiness of the country alongwith changing world scenario where socialism gave way to capitalist marketeconomy system. Globalization, liberalization and privatization in Indian economy,for past quarter a century, whereas brought newer complexities albeit highergrowth rate. Most important is the rise in inequality, leaving aside the ideologyof socialism and distributive justice. We are moving away from the ideal ofestablishing a just and fair society as was originally intended, to consumerismand materialism, leaving our cherished traditions based on spiritualism asGandhi and others like him had intended.There was a time when under Nehruvian shadow, leftist intellectual dominatedin the matters of governance and intellectual debates about the direction inwhich the polity ought to be moving. In interpreting Indian history, makingand unmaking of heroes and villains, the spectacle presented a view which

* Former Professor of Economics, Lucknow University, Lucknow, U.P.

ARTICLE 2



was not corroborated by the facts of the time in view of many other independentthinkers.Now, the economic issues of alleviating poverty and generating employment,coping with exploding population, on the one hand and downfall of ethicalstandards and criminalization of politics, in the parliament and the legislaturesof the states are looming large.In this backdrop, the paper tries to delineate the imperatives for making of anew India a success.Keywords: Socialist Pattern of Society, Mindset, Crony Capitalism, Corruption,Making of New India

The Psyche of PeopleIdeas come first before any action. So the behavior pattern of a person followswhat one thinks about a particular situation and what is in his opinion thebest course of action. Lionel Robbins visualized economics as a science whichstudies human behavior. The human behaviour is determined by mind whichinterprets situations on the basis of its training and preconceived notionswhich are formed on one’s educational background and circumstances in whichone is brought up, but also societal expectations from the individual. Howcorruption developed in Indian society and become entrenched, how and inwhat manner social behavior changed over time, is a matter of analysis. Whythose in authority and in governance could not perform? Why, and instead ofthinking for whole society and its welfare, did they think only for individualgains? Why was there a mismatch between one’s capabilities and his rewardsresulting in accumulation of income and wealth in the hands of a few? Theseare the questions of prime importance to be answered. Making of New Indiaand fulfillment of our dreams in own lifetime largely depends on the behaviouralpattern of the people at large.Man is a product of society. As is the society, so are its individuals (or wemay say otherwise too); who run the government, who run the businesses,who run the institutions, who lead the society. If the society and social institutionsget corrupt, there is no way the economy and the polity would not move onslippery path of destruction.Since the foundational works of Adam Smith (1759, 1776), economists haveexplored psychological and social influences on human decision making. JohnMaynard Keynes recognized “money illusion”—the human tendency to thinkof money in nominal rather than real terms—and used it in his proposedsolution to unemployment. He also recognized that many of our long terminvestments reflect “animal spirits” intuitions and emotions—not cool headedcalculation. Gunnar Myrdal was a student of cultural stagnation. HerbertSimon and F.A. Hayek based much of their work on the recognition that

Economic Journey of India: Issues in the Making of a New India


human beings can process only so much information at once and are notcapable of carefully weighing the costs and benefits of every possible outcomeof their decisions. Albert Hirschman argued that it is useful to rememberthat people have complex motives and that they value cooperation and loyalty.Other thinkers too have emphasized that man is not only an economic entity,calculative all the time. His real pleasures and satisfaction emerge from sacrifices,what he is doing for others who are in pain and sufferings. Altruism formcore of noble behavior and those who pursue this path are taken as noblebeings.In the past 30 years of research in decision making across many behavioraland social sciences have led economists to reach a stage where they measureand formalize the psychological and social aspects of decision making thatmany of the foundational contributors to economics believed were important.It has been visualized that people do not make decisions by taking into accountall costs and benefits. People want to conform to social expectations. Preferencesof people are dependent on context in which they are elicited and on thesocial institutions that have formed the interpretive frameworks through whichindividuals see the world.In view of these insights into human behavior development economics andpolicy have entered next generation. Whereas the first generation of developmentpolicy was based on the assumption that human beings make decisionsdeliberatively and independently, and on the basis of consistent and self-interested preferences, recent research shows that decision making rarely proceedsthis way. As a basic principal people’s decisions comes automatically andinstinctively; in other cases, they follow what others in society are doing andcopy it. In case, a segment of society adopts corrupt practices and flourishesin a small time, others follow the same path and majority of the people getcorrupt to make quick advance economically. And if the state turns out to bea soft state, corruption spreads like wild fire. In India, since the beginning ofthe seventies of the last century the downfall was perceptible and was notedby many a scholar in India.

The Ideological ShiftThe next issue in making of New India pertains to the philosophy of lifewhich one pursues. The ideology which a country follows decides the frame ofits development. The results follow the path which the country has chosen.Issues like democracy or dictatorship, liberty or regimentation, equality orefficiency, had been the matter of vision and selection for a pretty time.The collective wisdom of stalwarts of Freedom Struggle in India, afterIndependence, dreamt of an idealism in which the best of the world wouldfind expression. Democratic form of governance and socialism ensuring egalitarian


distribution of income and wealth with economic progress at a fast rate, werechosen to be enshrined in the Indian Constitution.The Constitution of India pronounced India in its preamble as SovereignDemocratic Republic and it was adopted on 26th January 1950. The preamblewas amended in 1976 to set India to be a Sovereign Socialist Secular DemocraticRepublic. As a matter of fact, the economic policies in the direction of establishinga Socialistic pattern of Society were pursued much before this amendmentwas brought in. In fact, equality and justice—social, economic and politicalwere originally enshrined in the Preamble of the Constitution. These ideasget reflected in the Directive Principles of State Policy, particularly in Articles38 and 39. To further strengthen the policy framework, in December 1954,the Parliament adopted a resolution which contained the following two clauses:

1. The objective of economic policy should be a Socialistic Pattern of Society;and

2. Towards this end, the tempo of economic activity in general and industrialdevelopment in particular should be stepped up to the maximum possibleextent.

Socialistic Pattern of Society essentially means that the basic criterion ofdetermining lines of advance must not be private profit, but social gain andthat the pattern of development and the structure of socio-economic relationsshould be so planned that they result not only in appreciable increases innational income and employment but also in greater equality in incomes andwealth. Major decisions regarding production, distribution, consumption andinvestment—and in fact all significant socio-economic relationships—must bemade by agencies informed by this social purpose. The benefits of economicdevelopment must accrue more and more to the relatively less privilegedclass of society, and there should be progressive reduction of the concentrationof incomes, wealth and economic power.Our nation builders like Mahatma Gandhi while dreamt of a self-sufficientvillage India based on village and small scale industries, Pundit Nehru hada fascination for industrialization as he was impressed with the performanceof Soviet Russia and other European countries who advanced on the basis ofIndustrial Revolution. The Industrial Policy Resolution presented by ShyamaPrasad Mukherji in the Parliament in 1949 adopted a Mixed Economy inwhich public sector or the state shall provide leading role in developmentassisted by the private sector. Subsequently, the Industrial Policy 1956 formedthe base of development planning and its direction. For removal of povertyand raising agricultural productivity and removal of injustices from theagricultural sector, Land Reforms were introduced. Side by side CommunityDevelopment Projects and National Extension Services were adopted in whichwhole country was divided in development blocks and a team of experts was



provided carrying out for agricultural development. Industrial developmenttook start through massive public sector investments in many of the projects.A base for sustained industrial development was created through manyinstitutions. Nehru was a modernizer par excellence, in view of some intellectuals.However, setbacks to the economy soon appeared in the form of high populationgrowth and rising demand for food and other essentials, Chinese Aggressionof 1962 during Nehru’s time and Pakistan war 1965 after Nehru. Soon theeconomy plunged into food shortage and an era of rationing and controlsemerged which changed the future shape of development and the psychologyof the people. With rationing and controls, black marketing and black moneygeneration leaped and Inspector Raj gave birth to corruption and rent seekingfor essential supplies of goods and services (public goods) provided by thegovernment. India entered a new phase of ethical degradation.The objectives of Five Year Plans were never achieved throughout sixties andseventies; growth rate of economy was around 3.5 per cent per annum andthe growth rate of per capita income was stagnant at one per cent per annumowing to high population growth in the range of 2.25 to 2.5 per cent perannum. Poverty continued at around 40 per cent. High inflation rates prevailedthroughout the seventies due to doubling of petrol prices by the OPEC cartel,once in 1973-74 and then in 1979.With liberalization of economy around 1985 and unshackling of the economy(The Tiger in chains) growth rate went up to 5 to 5.5 per cent. Notwithstanding,Balance of Payments crisis persisted and by 1990 the crisis was serious andIndia’s creditworthiness was at the lowest ebb. Under the compulsions, largescale liberalization of financial and trade sector was undertaken. An era ofglobalization, privatization and market economy system came into being givingway to oust socialism and government controls. Alongside came consumerism,materialism reflecting into Mall culture and its glare.The scenario changed with general election of 2014 which was fought on theissues of corruption and black money. With the coming of BJP in power withabsolute majority, unlike previous regimes, the aspirations of people ran highfor a corruption free and efficient government and hope emerged that thegovernment will provide good governance and bring back black money intomain stream and plug its sources. This is possible only when the governmentitself is free from corruption and is fair and efficient. With a Prime Ministerlike Modi, people see a strong leader who can deliver and root out systemiccorruption which is the root of black money generation and many of itsaccompanying evils in society. The transformation may only come when thepsychology of the people in general will change and they will find themselvesinto a situation where they cannot escape after doing wrong. This requires an


environment where institutions informed with obligations do justice to theirduties.

Political and Economic IssuesMajor political and economic issues are related with falling standards ofpolitical leaders and criminalization of politics and poverty and unemployment.India was governed for a long time by the Congress Party since Independencein 1947 but the situation changed after the demise of Nehru in 1964 andsubsequent split of the Congress Party into Syndicate and Indira Congresswho revolted on the basis of inner conscience and came to power. Forstrengthening new Congress Sanjaya Gandhi enrolled many with shadybackground into the party and this was the beginning of a new era of criminals’entry into politics. Up till now a few of political leaders were in practice ofusing muscle power of criminals at the time of elections for coming in power.Now they found, instead of supporting political leaders from back seat, it ispreferable to come up front and become political leaders themselves. Thedefinition of entry into politics changed from a missionary spirit of doing goodto the society, to attaining power. And as per the dictum “power corrupts andabsolute power corrupts absolutely” things started moving in a wrong directionsince the late sixties and they flourished during seventies and eighties gotmore maturity. Indira Gandhi’s authoritarian attitude/ approach added to thedownfall of political standards, as she started replacing independent thinkingchief ministers of states with the ‘yes men’ and sycophants. Many of theleaders who had independent thinking were sidelined and they lost theirvoice in making major decisions.At the same time, vis-à-vis, the sliding down of popularity of congress partyregional parties started gaining. The Green Revolution, of late sixties, hadbrought opulence to erstwhile landlords and the big land owners, who foundthat real power vests in politics and they started moving to politics. Coming topower in Center of Janata Government was the result. Later on many of theregional parties emerged, which became important in making and unmaking ofgovernments in later years of Indian political scene. Amassed black money andmuscle power later on became a deciding factor. Society was fast moving on anew direction when many of the definitions of right and wrong became blurred.The psychology and functioning of institutions were changing fast. In one ofthe Presidential address to the nation an “unholy alliance among the politicians,bureaucrats, and some of the important persons and businessmen” was indicated.Crony capitalism led the policy decisions of the nation into wrong direction andeconomic growth and development and distributive justice became the immediatecasualties. Powerful land mafias, mining mafias, education mafias and the likegripped the powers who were capable enough to bend economic policies in



their vested interest. Many of the scams which came to light involvedunimaginable sums of thousands crores and many of the high profile Ministersand their cronies and big corporate houses were found involved in the affairs.It has been visualized by the visionaries that “it is good to have good politicsand good economics separately but when politics enters into economics andeconomics (explicitly money) enters into politics the downfall of the two isunimaginable”. In India, politics slipped into an undefined domain and economyslipped into the hands of greedy corporate houses and the multinationals inthe situation. Growth rate doubled but the real gainers were only few, as aresult economic hardships of common man multiplied, leading to high inequalityof income and wealth. A parallel economy was flourishing whose growth ratewas much higher than the growth rate of national income of the country.

Move towards TransformationCommitment to unearth black money, root out corruption and providing goodgovernance is an uphill task. Over the past several decades in IndependentIndia, the situation developed in which mindset of people changed, aspirationsskyrocketed irrespective of the capabilities and merit of the individuals andtheir positions. Bribery in public offices, percentage system of commissions,and many forms of corruption became established facts. Primary corruptiongenerated several other forms of secondary corruptions like school admissionof children, health care in public hospitals, getting a berth in train and so on.Rent-seeking converted the state into a predatory state when the officialsgot more and more corrupt over time. Easy money and speed money wereaccepted facts of life to get the things done. Businessmen and professionalsattempted to evade taxes through second accounting, not to be shown ormade public, with the connivance of tax authorities who flourished on bribemoney thus acquired. Then came political-bureaucratic nexus through whichlarge part of public money allotted for projects were siphoned off and werepocketed by them and their cronies. All these developments changed thepsychology of the people over time and corruption was accepted as there wasno other way to survive.Recent studies have shown that the norm of corruption is so entrenched inIndia that the social meaning of an honest official is someone who demandsno more than the going rate as a bribe for providing public service (Wade1985). It has been observed that pressure to engage in corruption often comesfrom within the bureaucracy. In the country, a highly institutionalized informalsystem has developed for the purchase of transfers from one position to another,with the price dependent on how much the officeholder could expect to extractfrom his constituents for providing the services. The phenomenon is rampantin states like Uttar Pradesh and Bihar; in the former even the High court of


judicature termed it as transfer industry during a particular regime. Sale ofoffice and Rent-seeking are the other words for the practice. Jean Dreze in anarticle published in The times of India on 17 September 2001, with title “NoMore Lifelines; Political Economy of Hunger in Orissa” gave a candid accountof the commissions that were “due” to various officials for any developmentwork at Panchayat level: three per cent for the BDO, five per cent for theJunior Engineer, five per cent for the “gram panchayat extension officer”, fiveper cent for the Block Chairman, two per cent for the block clerk, two percent for the block cashier. When I (Dreze) asked what happened if, say, theBDO were an honest person, the (reporter) exclaimed, if the BDO is honest,he will stick to his three per cent”. The rate of twenty per cent has beenreported in the Public Works Departments of Uttar Pradesh in passing thebill of the contractors by the Executive officers. The practice is universal inalmost all the public offices. This shows the state of abysmal public servicesand the loot of public resources meant for development and poverty alleviation.In states like Bihar and Uttar Pradesh, the bulk of socialist movement andsocial justice movement became afflicted with the malaise of corruption.“Socialism in a family” and the “maximum benefit of the clan and theircronies” and a particular community became the basic principles which ruinedboth the states. Development funds which were meant for all economicallyand socially backward classes were used for the development and empowermentof a particular community who grabbed important offices and position todistribute state benefits and employment. Most of the contracts went in thehands of a few. As a result, most of the backward communities remained instaggering poverty and neglect for long.Further these states had another distinction in recruiting human resourceswhich were not qualified enough for the task of state administration whichaffected badly the quality of governance. It also resulted in organized siphoningoff of resources from state exchequer. Even though, the “input” related scamstershad staggering accumulation, it did not go into investment but only promotedconspicuous consumption and was used for staying long in power and nextelections which were increasingly based on money and muscle power.The greatest challenge before the New Government is therefore to identifythe citadels and established vicious practices in public offices and change thesituation in which such practices are severely punished and eliminated. Socialtransformation and speedy economic development would remain a far cry ifthese challenges are not properly addressed.In Making New India this mind set needs to be changed. Good governance,neat governance, and effective and efficient governance may do a lot in thisdirection which should be based on “carrot and stick” approach. Situations



will change when individuals will change. When individuals will change, thesociety and social behavior will change. Transformation in positive directionwill come through a culture of hard work, responsible behavior and capabilityenhancement. State and the Prime Minister may take a lead role in it.The new government has made laudable efforts in at least three directionsrecently: identifying leakages in subsidy distribution and plugging them throughreplacing price based subsidy to direct benefit transfer in bank accounts of thebeneficiaries; demonetization of high denomination currencies; and the passingof Goods and Services Tax and its implementation since July 1st 2017. Theseare the game changers having long term impact on setting the things right.Increasing use of JAM Trinity; Aadhar-PAN Linkage, biometric attendance ingovernment offices, coating urea fertilizer with neem, linking MNREGA toinfrastructure development; bankruptcy code; law against benami propertiesdo have the potential to change human behavior in right direction. UniversalBasic Income scheme, when implemented, may reduce poverty substantiallyin future. All these steps point toward the commitment of the government intransforming India. Use of technology, like digitizations has the potential forchanging the game altogether and eliminate possibilities of corruption andtax evasion. When the environment will change, individual and social behaviortoo will be disciplined.The next step should be in the direction of electoral reform which may barentry of criminals in politics. Then comes breaking down political-beaureaucraticnexus which is the major source of corruption. There is an urgent need insome of the states to free the police force from politicians’ interference so thatthey could perform independently. Next comes the judicial reform to root outcorruption from judiciary, particularly lower judiciary.Over and above, population factor is in the root of all has to be recognized. Nosystem could work when there is an overload on the system. Population factorhas two dimensions; one the size factor and the other, the quality factor. To myestimation, India suffers more from the second factor, i.e., the quality factor ofpopulation and hence demographic dividend factor has a big “if” before it.The nation has high hopes from the government that transformation (AchcheyDin) will come soon. Much depends on the people’s cooperation, too. Thedream of New India will only be realized when mindset of individuals andindividual behavior pattern changes. The issue is that of “National Character”,the character of Indians, like that of Japanese people.

References1. Gupta, I.D. (2009), Current Issues before Indian Economy, Abhijeet Publications,

Delhi.

19Realizing Ambedkar's Vision without Reservation...2. Gupta, I.D. (2010), Globalization, Poverty and Injustices: in Indian Perspective, The

Indian Journal of Economics, No. 358, Vol. XC, January 2010.3. Gupta, I.D. (2015), Deviations and Consequences: India’s Economic Policy, Challenges

and Reality, Presidential Address, UPUEA, IIT Roorkee, 2015, published in UPUEAEconomic Journal, Volume 8, Number 8, April.

4. Gupta, I.D. (2002), Corruption and Rent-Seeking in Less Developed Countries: AnIndian Perspective, The Indian Journal of Economics, No. 328, Vol. LXXXIII, July.

5. Gupta, I.D. (2014), Corruption and Black Income Generation in Democratic India,The Indian Economic Journal, Special Issue, December.

6. World Bank (2015), World Development Report 2015: Mind, Society, and Behavior.7. Wade, Robert (2015), The System of Administrative and Political Corruption: Canal

Irrigation in South India, Journal of Development Studies, 1982, quoted in WorldDevelopment Report, pp. 60-61.

8. Gupta, Shaibal, Communalism v/s Corruption, The Times of India, July 29, 2017.9. Dreze, Jean (2001), No More Lifelines: Political Economy of Hunger, The Times of

India, September 17.



Monetary Policy and Inflation in India:A Study of Recent Past

Indranil Chowdhury*

ABSTRACT

Monetary targeting i.e. regulating the money supply in line with the increasein output was the monetary policy followed by the RBI when India embarkedupon the economic liberalisation programme. However, in April 1998, themonetary policy was changed from monetary targeting to a policy of multipleindicators approach. This was necessitated, it was argued, due to the financialsector developments and innovations.The current monetary policy framework is based on the recommendations ofthe Urjit Patel committee (2014) report. It recommended flexible inflationtargeting framework for India. This was officially accepted by government ofIndia in February 2015. This framework is based on New KeynesianMacroeconomics.This paper critically discusses the three regimes of monetarypolicy making since 1990 and the theoretical model on which the policy isbased.At present the inflation as measured by WPI (base 2004-05) is below 5%.However, there was persistent high inflation between mid-2009 and mid-2014. WPI inflation started to fall from the middle of 2014 which coincidedwith the sharp fall in international oil prices. Empirical testsare conductedto find the drivers of inflation in India in the recent past. We do this exercisefor the period in which inflation was tried to be controlled by using the policyrate i.e. repo. Our results suggest that inflation most probably can be betterexplained by the cost push factor like change in crude oil prices and no evidenceis found to conclude that the output gap i.e. the demand affects inflation. Maybe the Indian economy was operating at the horizontal section of the Phillipscurve.

* Assistant Professor, P. G. D. A. V. College, University of Delhi, New [email protected]

ARTICLE 3



IntroductionFollowing the experience of high rates of inflation in the advanced economiesduring the 1970s, the incapability of Keynesian demand management incombining output and price stability within the advanced economies came tothe fore and as a result monetarism emerged as the alternative to Keynesianism.The central tenets of monetarism comprised of a revival of the quantity theoryand the classical long run neutrality of money. It was argued that in the longrun, changes in money supply cannot affect real variables like output andemployment and its only effect would be on the level of prices. The policyprescription, which followed from this understanding, was that the CentralBank should maintain growth of money supply at a fixed rate in order tomaintain a stable rate of inflation (Friedman, 1968). Although monetarismwas challenged on theoretical grounds (Kaldor, 1986), monetary targeting bythe Central Banks in order to control inflation became the centerpiece oftheir economic policy making.Though not exactly concurrently with the developed countries, monetary policyframework in India also experienced a drastic shift since mid-1980s—fromone of pursuing monetary target with feedback to multiple indicators to thatof flexible inflation targeting. Thus, we may break down the monetary policymaking in the post liberalisation period into three distinct regimes.

Three RegimesMonetary Targeting with FeedbackThe Committee to Review the Working of the Monetary System (ChakrabortyCommittee, 1985) formed in India in the backdrop of the policy shift that hadoccurred in the advanced economies vis-à-vis the role of the government andthe monetary authorities came to the conclusion that the objective for whichmonetary policy should be properly utilized is price stability. It was arguedthat in a society in which a very large segment of the population has no‘hedge’ against inflation, inflation hurts the poor the most. Also, in the contextof the closer integration with the world economy, the need to ensure that thedomestic price level does not rise disproportionately to that of the other countrieswas underlined. Hence, “monetary targeting with feedback” was recommendedto regulate money supply in line with the increase in output. The target forthe monetary expansion can be given by the equation

품푴 = 흅 + 풆푴,풀품풀

where 푔푀 is the target for monetary expansion, 흅 is the acceptable rise inprice, 품풀 is the anticipated real output growth, and eM,Y is the income elasticityof demand for money. (Shetty and Ray, 2015).

Monetary Policy and Inflation in India: A Study of Recent Past


It also advocated an agreement between Central bank and government on thelevel of monetary expansion and the extent of monetization of fiscal deficit. Italso opined that the interest rates could not be arbitrarily set at any leveland so the rates should be set in such a way that they satisfy some importantcriteria. Supposed benefits from positive real rates were also highlighted. Ithas been argued by the later adherents of the same policy approach that suchmonetary targeting is not necessarily equivalent to rigid monetary targetsand neither does it amount being an inflexible policy rule (Rangarajan, 2009,2001). The monetary target was said to be fixed as a range in order to controlinflation, while also taking into account the expected rate of growth of thereal sector. While Chakraborty Committee regarded 4% as the acceptablelevel of inflation, for Rangarajan it is 5-6%.It was claimed on the basis of empirical evidence that there was a degree ofstability in the money demand function in India and therefore the inflationrate over a long period was said to be reasonably explained by the growth inmoney supply (Rangarajan, 2009). Moreover, government borrowing from theReserve Bank of India was identified as the ‘major’ factor contributing to theincrease in reserve money and therefore overall money supply and consequently,inflation. It was argued that government borrowing from the RBI createdreserve money in the system which increased money supply. Since demandfor money was a function of money income, and the level of real income wasconsidered to be at the full employment level, the excess supply of moneyresulting from deficit financing led to a rise in prices. According to Rangarajan,the demand for credit was also not a binding constraint on money growthsince it was not deemed to be related to the behavior of the real sector. The‘price effect’ of a given expansion of money supply was claimed to be higherthan the ‘output effect’ on the basis of empirical results (Rangarajan, 1998).The problem with these arguments is that it presupposes that there alwaysexists an adequate unsatisfied demand for the credit which banks can meetwhenever their reserves expand, irrespective of the state at which the realeconomy happens to be, (Patnaik, 1986).Despite its tenuous theoretical framework, a limit on the extent of fiscaldeficit and its monetization was strongly recommended in order to providegreater maneuverability to the monetary authorities. In keeping with thatobjective and to regulate the volume of the money supply, an agreement wasreached between the Reserve Bank of India and the Union government tolimit the credit extended to the government. In 1997 the government and theRBI signed an agreement that put an end to the practice of automaticmonetization of fiscal deficits. This was replaced by a scheme of Ways andMeans Advances (WMA). With effect from April 1, 1998, the interest rate onWMA was fixed normally at bank rate. This is believed to have enhanced the‘autonomy’ of the RBI in relation to the fiscal decisions of the government,


which is deemed essential to undertake effective monetary policy measures toachieve the price stability.Shetty and Ray (2015) think that despite the analytical critiques of theChakraborty Committee report, it could be credited with highlighting theissue of monetary-fiscal nexus in monetary policy decision making in India.However, out of total 13 years of monetary targeting, in only four years thetargets could be achieved (Table 1).

Table 1: Performance of Monetary Targeting Regime

Year M3 GDP Inflation

1985-86 16.0 target achieved 4.1 4.8

1986-87 18.6 4.3 5.1

1987-88 16.0 target achieved 4.3 10.7

1988-89 17.8 10.0 5.7

189-90 19.4 6.9 9.1

1990-91 15.1 target achieved 5.4 12.1

1991-92 (Oct.) 19.3 0.8 13.6

1992-93 15.7 5.3 7.0

1993-94 18.4 6.2 10.8

1994-95 (Oct.) 22.3 7.8 10.4

1995-96 13.7 target achieved 7.2 5.0

1996-97 16.2 7.5 6.9

1997-98 17.6 5.1 5.3

Source: Mohanty and Mitra (1999) as cited in Shetty and Ray (2015)

Multiple Indicators ApproachIn April 1998, the monetary policy was changed from money supply targetingto a policy of multiple indicator approach. Reserve Bank of India announcedthat it was done to “widen the range of variables that could be taken into formonetary policy purposes rather than rely solely on a single instrument variablesuch as the growth in broad money (M3)”. This was necessitated, it wasargued, due to financial sector developments and innovations. It was claimedthat monetary policy had to be based on broad based information in thetransition phase (Vasudevan, 2002). Later on Urjit Patel Report (RBI, 2014)noted, “analysis of the money growth outcomes during the monetary targetingregime indicates that targets were rarely met. Financial innovations andexternal shocks emanating from swings in capital flows, volatility in theexchange rate and global business cycles imparted instability to the demandfor money.”



Thus, money supply became one of the many variables. Money market interestrates, exchange rates, foreign exchange reserves, credit to government andcommercial sector, and fiscal position of the government were closely monitoredto initiate policy actions. Moreover, this approach was augmented by forwardlooking indicators such as RBI’s industrial outlook survey, capacity utilisationsurvey, professional forecasters’ survey, inflation expectations survey. Projectionof growth and inflation were done on the basis of the assessment arrived atby these surveys.Moreover, based upon the argument that large fiscal deficits impair the abilityof the Central Bank to manoeuver with interest rate, since fiscal deficit isbelieved to lead to an increase in the interest rate, legislation was called for.The Fiscal Responsibility and Budget Management Bill was passed in theParliament in 2003 and the rules were notified in 2004. This was seen as animportant step towards removing impediments to the effective conduct ofmonetary policy. Thus, the dominant view on monetary policy was that thenominal interest rate can only be brought down when the inflation rate remainedand was expected to remain low. Therefore, a credible assurance to maintaina low inflation rate in the future was advocated, which is somewhat similarto the targets set by inflation targeting Central Banks (Rangarajan, 2001).

Financial sector reformsFinancial sector reforms in India were based on two reports, The Report ofthe Committee on Financial System (Narasimham Committee I, RBI, 1991)and the Report of the Committee on Banking Sector Reforms (NarasimhamCommittee II, GoI, 1998). They ushered in the operational freedom to thecommercial banking sector as well as development of prudential norms. Themain recommendations of Narasimham Committee I were1:• Reduction in the SLR and CRR: SLR was recommended to reduce from

38.5% to 25% and CRR from 15% to 3-5%• Phasing out of directed credit programme: This recommendation was not

accepted.• Interest rate determination: Elimination of administrative controls on

interest rate and concessional rates for the priority sector was recommended.• Structural reorganisation of the banking sector: Number of public sector

banks should be reduced. This was not accepted.• Creation of an Asset Reconstruction Fund (ARF).• Doing away with Dual Control: It was recommended that the dual control

of the RBI and the banking Division of the Ministry of Finance (GoI)should be done away with and RBI should be the main agency to regulatethe banks in India.


• Operational Autonomy for Banks: Banks must enjoy operational autonomy.The main recommendations of the Narasimham Committee II were2

• Merger of Strong Banks: Merger of strong banks was recommended asthat would have a multiplier effect on the industry.

• Narrow banking: Weak banks will be allowed to place their funds onlyin short term risk free assets like government securities. Thisrecommendation was not accepted.

• Capital adequacy ratio: It was recommended that the prescribed adequacynorms should be increased so as to improve the inherent strength of theIndian banking system.

• Bank management: A review of functions of bank boards is needed toprofessional corporate strategy.

• Reviewing and amending of laws governing the banking system wasalso recommended.

RBI started deregulating the interest rates in the early 1990s. Also the SLRas gradually reduced from 38.5% in 1991 to 25% in 1997. Currently the SLRis pegged at 19.5%. CRR was also reduced from a very high level of 14.5%in 1993 to 10% in 1997 and subsequently to 5% in 2002. At present the CRRis 4% (Figure 2). It is argued that the moderation of the SLR and CRRresulted in the improvement of the lendable resources to the banking sector.The call money market was also developed in the early 2000s. It is primarilyan overnight market among commercial banks, cooperative banks and primarydealers i.e. financial institutions who exclusively deal in government securities.Liquidity adjustment facility (LAF) corridor was also set up during thisperiod. This mechanism is used for sucking or injecting temporary liquidityby the RBI to the commercial banks. This is done by operating repo andreverse repo rates. From the beginning of 2001 repo and reverse repo rates3

started to provide a corridor for market interest rates to evolve. Moreover,Ray (2013) notes that the call money market rate is the rate at which onebank lends to another at the end of the day and this rate is expected to liebetween the repo and reverse repo rates. This has emerged as the RBI’soperating target of monetary policy. Apart from this, there are two othersegments in the money market, a. market repo and collatarised borrowingand b. lending obligations (CBLO)4. So at present RBI have several direct andindirect instruments for implementing monetary policy5. Repo and reverserepo could be termed as price base instruments and CRR and SLR as quantitybased instruments.



Figure 1

0123456789

10Percentages

Repo and reverse repo

Series1 Series2

Source: Database on Indian Economy, RBI, 2018

Figure 2

Source: Database on Indian Economy, RBI, 2018

Urjit Patel CommitteeIn the backdrop of global financial crisis and its aftermath, along with persistenthigh inflation and low growth rate experienced in India, an expert committeewas set up in 2013 by Reserve Bank of India RBI (2014). The main objectiveof the Committee (UPC) was to recommend ‘what needs to be done to reviseand strengthen the current monetary policy framework with a view to, interalia, making it transparent and predictable’. The Committee noted that thoughmonetary aggregates have served as nominal anchors but they have beenundermined by instability and loss of predictability of the demand for money.


This reduces the accountability of the monetary authority when targets aremissed. It also highlighted that since 1980s many countries have adoptedinflation as the nominal anchor for the monetary policy. That, according tothe committee, has a strong theoretical and empirical support. So, inflationtargeting regimes, the report claimed, have yielded significant benefits interms of reduced volatility. Inflation targeting as a monetary framework, itnoted, has been adopted, starting with Chile in 1991, by many emergingmarket economies. Thus, on the basis of experiences of other inflation targetingcountries and recommendations of the previous committees, UPC recommended:

Headline inflation should be the nominal anchor for the monetary policyframework. This nominal anchor should be set by the RBI as its predominantobjective of monetary policy in its policy statements. The nominal anchorshould be communicated without ambiguity, so as to ensure a monetarypolicy regime shift away from the current approach to one that is centeredon the nominal anchor. Subject to the establishment and achievement ofthe nominal anchor, monetary policy conduct should be consistent with asustainable growth trajectory and financial stability.

The UPC also recommended that combined consumer price index (CPI) shouldbe adopted as the measure of the nominal anchor for the policy communicationas it reflects the cost of living and influences inflation expectations. Also, thetarget for inflation, according to the UPC committee, should be set at 4%with a band of +/-2% around it.6 That the target should be set in the frameof two year horizon, was also proposed. The committee recognised the factthat food and fuel account for more than 57% of the CPI on which the directinfluence of monetary policy is limited. Nevertheless, it recommended that‘commitment to the nominal anchor would need to be demonstrated by timelymonetary policy response’. However, it has been argued that using CPI as theindicator for monetary policy might lead to a more restrictive monetary policy.Also, it has been pointed out that the evidence from other countries showsthat the impact of interest rate on changes on inflation is weak. So, therecould be high inflation with high interest rates also. This would happen if theinflation is essentially due to cost push factors like rise in the internationalprices of oil, reduction of subsidies, etc. Moreover, the theoretical model of theUPC is based on a closed economy. In a world of cross-border capital flowsand relatively open financial borders,Central banks have to focus on exchange rate a lot more than on inflation.Thus, it can be concluded that this whole report is like a defence of the RBI’spolicy of keeping very high interest rate (Chandrashekhar, 2014).The Theoretical Framework of UPCThe theoretical framework of UPC is based on New Keynesian Macroeconomics(NKM). It provides the theoretical foundation for inflation targeting, monetary



policy rules, and central bank credibility. With interest rate as the instrumentand inflation as the target, it is a one instrument-cum-target framework.Here, we will utilize the BMW model from Bofinger et al. (2006) to summarizethe NKM. There are three main building blocks in the model. They are an IScurve, a Phillips curve and a monetary policy rule. The first block, IS curve,is given as

y = a – br + e1 ...(1)where y is the output gap. It is defined as the deviation of (the log) aggregateoutput from its potential or full capacity level. r is the real interest rate. a isthe autonomous demand component. e1 is a demand shock. Now, y will bezero in the absence of shocks and thus it will depend on the real interest rater0 = a/b. This r0 is called the neutral short term interest rate. Phillips curveis the second building block.

2e dy e ...(2)

where is the inflation, e is expectation about inflation, d is a non-zeropositive parameter and e2 is a supply shock. Thus, inflation is determined bythe expectations about inflation, output gap and a supply shock. Assumingcredibility of the Central Bank, 0

e , where 0 is the Central Bank’s inflationtarget. Therefore, (2) becomes

0 2dy e ...(3)It is argued that (3) is not a short term supply curve but simply a device forcalculating the inflation rate that is associated with an output gap. The thirdbuilding block is the monetary policy rule,

0 0( ) ,r r e fy with , 0e f ...(4)Where r0 the equilibrium real rate of interest, e and f are the weights attachedto inflation and output gap respectively. An increase in the nominal interestrate increases the real interest rate due to nominal rigidities. This wouldapparently result in the rise of gap between the actual and real interest rate.In the process, the output gap is reduced which in turn would reduce theinflation via the Phillips curve.A number of important features of NKM have been criticised by heterodoxeconomists. It has been pointed out that inflation targeting by the use ofinterest rate would depend on whether the price index includes items thatare directly sensitive to the interest rates. Some components of prices mightbe demand related and others might be more driven by costs (Arestis andSawyer, 2008). Also, one for one relationship between short term interest rate


set by the Central Bank and investment has been questioned. However, ithas been acknowledged that contractionary monetary policy, through increasedshort term interest rate, can have some effect on aggregate demand. But intimes of recessions reductions in interest rates are unlikely to stimulateinvestment.Also, the notion of a ‘neutral’, ‘equilibrium’, or ‘natural’ real rate of interestis rejected by the critics of NKM. Further, it has been argued that inflationneed not rise with increased capacity utilisation. For large ranges of output,there seems to be a little impact on inflation. It has been pointed out thatchanges in capacity utilisation need only be inflationary at levels of capacitynear full utilisation. It is claimed that price is determined as mark-up overcosts. So, cost pressures will remain constant over a long-range of capacityutilisation. From it follows, the Phillips curve will be horizontal for largeranges of output and employment. There could be vertical shift of the horizontalsegment of the Phillips curve due to the increase in prices of the primarycommodities.

Monetary Policy and InflationAs we have seen that inflation was tried to be controlled by targeting moneysupply in the beginning of the liberalisation process. Then, it was tried to becontrolled by using multiple indicators approach. Now the dominant view isthat inflation can be controlled by changing the policy rates and through thatthe inflation expectations. It implicitly assumes that inflation is essentially ofdemand pull in nature.At present the inflation rate as measured whether by WPI (base 2004-05) ornew CPI (base 2012), is below 6%. However, there was persistent high inflationbetween June-2004 and Dec-2004. Next time, from June 2006 to April 2007WPI inflation was more than 6%. There was a brief phase when inflationtapered off but it picked up again from March 2008 and reached 11.1% inAugust 2009. Next inflationary episode started from December 2009 and wenton till November 2013. After that WPI inflation started to fall from themiddle of 2014, which coincided with the sharp fall in international oil prices.As evident from the following Figures 4, 5 and 6, the year-on-year growthrate of WPI has been closely associated with similar movements in the growthrate of crude oil prices. Oil prices rose from $30 per bbl in January 2004 to$ 49 per bbl in March 2005. Similarly, in 2007-09 also, it increased from $65per bbl in April 2007 to $113 per bbl in August 2009. The price was morethan $100 per bbl from February 2011 to August 2014. Then it started to fallfrom November 2014 which most probably led to a fall in the WPI inflation.The RBI continuously increased the repo rates during this inflationary phasehowever it was unsuccessful in controlling inflation (see Figure 3).



Figure 3

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WPI inflation, Repo rate, and % change in crude prices

WPI (All commodities) Repo rate (%) Y-o-y change in crude prices

It could be argued that inflation during this phase might be due to the supplyshock emanating from the rise in crude prices. Moreover, if the economy is inthe flat section of the new Keyenesian Phillips curve then inflation cannot becontrolled by increasing the policy rate such as repo, as it is graphicallyshown in the following diagram 1.Due to a rise in crude prices, a supply shock, the Phillips curve will moveupward (from PC_1 to PC_2) and as a result the inflation will also increase(π_0 to π_1). To reduce that inflation if the policy rate is increased then itmight only worsen the situation by opening up the output gap by contractingdemand. Of course, it is assumed here that the change in the nominal interestrate by the Central bank will necessarily result in a change in real interestrate because of nominal rigidities.However, some of the explanations which have been put forward to explainpersistent high inflation in India in the recent past are: too much of buyingpower chasing too few goods and services, growing prosperity and dietaryshifts, increase in minimum support prices, increase in rural wages, increasein rural liquidity and credit. Needless to say that, in all these views, inflationis seen almost exclusive in demand pull in nature. And it seems that there issome reluctance to accept the role of oil prices in determining the inflationrate.Now we propose to develop an alternative explanation to the phenomenon ofinflation by looking at the cost push factors mainly international oil prices.We will look at the inflation data of WPI (base 2004-05). Descriptive dataanalysis shows that there is definitely a pattern in which inflation has moved


contemporaneously with the international oil prices. We will try to find outwhether there’s any econometrically significant relation between the two.

Diagram 1

Figure 4: WPI inflation y-o-y.*

Year/ Month Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

2001-02 5.5 5.6 5.3 5.3 5.4 4.5 2.9 2.6 2.1 1.5 1.4 1.82002-03 1.5 1.5 2.4 2.8 3.3 3.5 3.1 3.4 3.3 4.2 5.3 6.02003-04 6.6 6.5 5.4 4.6 3.9 4.9 5.1 5.4 5.8 6.5 6.1 4.82004-05 4.5 5.0 6.7 7.6 8.5 7.9 7.3 7.5 6.7 5.5 5.0 5.42005-06 5.3 4.6 4.7 4.8 3.5 4.4 4.7 3.9 4.4 4.4 4.5 4.22006-07 5.0 6.0 6.8 6.5 7.1 7.0 6.9 6.7 7.0 6.6 6.6 6.72007-08 6.2 5.5 4.5 4.4 4.0 3.4 3.2 3.7 4.0 4.5 5.7 7.72008-09 7.9 8.2 10.9 11.1 11.1 10.8 10.7 8.6 6.7 5.9 3.6 1.62009-10 1.2 1.5 -0.4 -0.3 0.5 1.4 1.8 4.7 7.1 8.7 9.7 10.42010-11 10.9 10.5 10.3 10.0 8.9 9.0 9.1 8.2 9.4 9.5 9.5 9.72011-12 9.7 9.6 9.5 9.4 9.8 10.0 9.9 9.5 7.7 7.2 7.6 7.72012-13 7.5 7.5 7.6 7.5 8.0 8.1 7.3 7.2 7.3 7.3 7.3 5.72013-14 4.8 4.6 5.2 5.9 7.0 7.0 7.2 7.5 6.4 5.1 5.0 6.02014-15 5.5 6.2 5.7 5.4 3.9 2.4 1.7 -0.2 -0.5 -0.9 -2.2 -2.32015-16 -2.4 -2.2 -2.1 -4.0 -5.1 -4.6 -3.7 -2.0 -1.1 -1.1 -0.9 -0.52016-17 0.8 1.2 2.1 3.7 3.9 3.8 3.4 3.2 3.4 5.50 6.50 5.70

Source: Data base of Indian economy, RBI. 2001 April to 2005 March base 1993-94, 2005April to rest base 2004-05.



Figure 5: Crude Oil Prices, Indian Basket, ($/bbl)*7

Year April May June July August September October November December January February March

2000-01 22.51 26.60 28.49 27.26 28.46 31.34 30.50 30.92 23.25 24.02 25.92 23.822001-02 24.82 26.95 26.63 23.99 25.01 24.79 20.05 18.24 18.24 18.92 19.55 23.312002-03 25.03 25.00 24.05 25.18 25.86 27.49 26.90 23.68 27.11 29.59 31.26 28.832003-04 24.21 25.00 26.42 27.46 28.66 26.27 28.45 28.20 28.97 30.01 29.61 32.212004-05 32.36 36.09 34.22 36.35 40.53 39.15 43.37 38.82 36.85 41.00 42.58 49.272005-06 49.43 47.02 52.72 55.01 60.03 59.74 56.28 53.31 55.05 60.61 58.95 60.012006-07 67.06 67.33 66.90 71.29 70.87 60.94 57.26 57.80 60.34 52.62 56.49 60.262007-08 65.48 65.76 68.10 72.58 68.97 74.78 79.33 89.15 87.92 89.52 92.16 99.762008-09 105.77 120.91 129.72 132.47 113.05 96.81 69.12 50.91 40.61 43.99 43.22 46.022009-10 50.14 58.00 69.12 64.82 71.98 67.70 73.06 77.39 75.02 76.61 73.69 78.022010-11 84.08 76.16 74.33 73.54 75.13 76.09 81.11 84.26 89.77 93.87 101.62 110.712011-12 118.64 110.80 109.99 112.53 106.94 108.79 106.11 109.62 107.19 110.47 117.67 123.612012-13 117.97 108.05 94.51 100.34 110.07 111.77 109.79 107.87 107.28 109.55 112.68 106.452013-14 101.57 101.10 101.11 104.86 108.45 109.47 107.37 106.55 108.72 105.29 106.19 105.302014-15 105.56 106.85 109.05 106.30 101.89 96.96 86.83 77.58 61.21 46.59 56.43 55.182015-16 59.07 63.82 61.75 56.30 47.33 46.10 46.68 42.50 35.68 28.08 30.53 36.422016-17 39.88 45.01 46.96 43.52 44.38 44.48 49.25 44.46 52.74 54.08 54.86 51.47

Source: Petroleum Planning and Analysis Cell (PPAC), GoI.

Figure 6: Y-o-Y change in crude prices.Year/ Month Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

2001-02 10.3 1.3 -6.5 -12.0 -12.1 -20.9 -34.3 -41.0 -21.5 -21.2 -24.6 -2.12002-03 0.8 -7.2 -9.7 5.0 3.4 10.9 34.2 29.8 48.6 56.4 59.9 23.72003-04 -3.3 0.0 9.9 9.1 10.8 -4.4 5.8 19.1 6.9 1.4 -5.3 11.72004-05 33.7 44.4 29.5 32.4 41.4 49.0 52.4 37.7 27.2 36.6 43.8 53.02005-06 52.8 30.3 54.1 51.3 48.1 52.6 29.8 37.3 49.4 47.8 38.4 21.82006-07 35.7 43.2 26.9 29.6 18.1 2.0 1.7 8.4 9.6 -13.2 -4.2 0.42007-08 -2.4 -2.3 1.8 1.8 -2.7 22.7 38.5 54.2 45.7 70.1 63.1 65.52008-09 61.5 83.9 90.5 82.5 63.9 29.5 -12.9 -42.9 -53.8 -50.9 -53.1 -53.92009-10 -52.6 -52.0 -46.7 -51.1 -36.3 -30.1 5.7 52.0 84.7 74.2 70.5 69.52010-11 67.7 31.3 7.5 13.5 4.4 12.4 11.0 8.9 19.7 22.5 37.9 41.92011-12 41.1 45.5 48.0 53.0 42.3 43.0 30.8 30.1 19.4 17.7 15.8 11.72012-13 -0.6 -2.5 -14.1 -10.8 2.9 2.7 3.5 -1.6 0.1 -0.8 -4.2 -13.92013-14 -13.9 -6.4 7.0 4.5 -1.5 -2.1 -2.2 -1.2 1.3 -3.9 -5.8 -1.12014-15 3.9 5.7 7.9 1.4 -6.1 -11.4 -19.1 -27.2 -43.7 -55.8 -46.9 -47.62015-16 -44.0 -40.3 -43.4 -47.0 -53.6 -52.5 -46.2 -45.2 -41.7 -39.7 -45.9 -34.02016-17 -32.5 -29.5 -23.9 -22.7 -6.2 -3.5 5.5 4.6 47.8 92.6 79.7 41.3

Source: Author’s calculations from data given in Petroleum Planning and Analysis Cell(PPAC), GoI.


Empirical ResultsWhether the changes in the inflation rate in India are driven by a demandpull (output gap) or cost push factors (growth rate of crude oil prices) is amatter of empirical investigation, which is precisely what we do now. In orderto examine the trend in inflation rate and its plausible causes, we considerthe augmented Phillips curve. We try to see whether the output gap isstatistically significant in explaining inflation as predicted by the theory. Wedo this exercise using the WPI as the measure of inflation as RBI was targetingWPI till 2014. We do a simple OLS time series regression, where the inflationrate is taken as the dependent variable while the lagged inflation rates, theoutput gap, the growth rate of crude oil price, growth rate of exchange rateand their various lags are taken as independent variables.The augmented New Keynesian Phillips Curve (NKPC) equation can be writtenas

푊푃퐼푡 = 훼푖푊푃퐼푡−푖

3

푖=1

+ 훽푖푌퐺퐴푃푡−푖

3

푖=0

+ 훾푖푂퐼퐿푃푅푡−푖

3

푖=0

+ 훿푖퐸푋푅푡−푖

3

푖=0

+ 푢푡

where symbols are quite clear.Data8

• WPI inflation is the y-o-y growth rate of the WPI index for all commodities.For 2001:04 to 2005:03 the base is 1993-94 prices and for the rest till2017:03 the base is 200-05. Source: Handbook of Statistics on the IndianEconomy (HBS), Reserve Bank of India (RBI).

• Index of Industrial Production (IIP), the base is 1993-94. The linking factorfor 2004-05 to 1993-94 is 2.11. We have taken the general index. It is ourproxy for output (Y). This has been chosen to get a long monthly series ofoutput. Source: HBS, RBI and Central Statistics Office (CSO), GoI.

• Crude Oil prices are average of daily prices of respective month. It is inUS dollars. For the regression exercise, we take the y-o-y change in crudeprices for each month for the Indian basket. The series is from 20001:04 to2017:03. Source: Petroleum Planning & Analysis Cell, Ministry of Petroleumand Natural Gas, Government of India (PPAC-GoI).

• Exchange rate data is taken from HBS, RBI. We construct a monthlyseries of y-o-y variation of exchange rate of Rs. vis-a-vis US dollar for theperiod 20001:04 to 2017:03.



Calculation of the Output GapFirst, we check for seasonality of the data series IIP, a proxy for Y and calledYIIP. HEGY test shows that there’s seasonality. X-12 ARIMA is used to de-seasonalise the series. Hodrick Prescot (HP) filter is used to construct theseries for trend of potential output. The difference in the seasonally adjustedseries and the trend series give us the series for the output gap. (YIIPGAP=YIIPSA - hptrend01)

Unit Root TestsWe conduct unit root tests for all the four series. The results are as follows:

Augmented Dickey-Fuller Test

Name of the variable t statistics Prob.*

INFWPI -2.084615 0.5504

YIIPGAP -4.420251 0.0026

OILPR -3.121469 0.1045

EXR -3.309759 0.0680

*MacKinnon (1996) one-sided p-values.

It is evident from the previous table that except YIIPGAP all series arenonstationary. So we take first difference to make them stationary. The resultsof the ADF test on the first differenced series are given below.


Name of the variable t statistics Prob.*

DINFWPI -5.201076 0.0001

DOILPR -6.702309 0.0000

DEXR -5.729274 0.0000

*MacKinnon (1996) one-sided p-values.

Regression ExercisesWe run a regression on stationarised series of variables, taking first differenceof WPI for measuring inflation. In order to check robustness of the exercise,


we also carry out another regression exercise with another specification inwhich variables are taken in the log form. Lag order is upto three years.The Regression-1 Result:

Dependent Variable: DINFWPI

Method: Least Squares

Included observations: 188 after adjustments

Variable Coefficient Std. Error t-Statistic Prob. VIF

DINFWPI(-1) 0.323692 0.072498 4.464805 0 1.631931

DINFWPI(-2) -0.11449 0.076675 -1.49312 0.1372 1.813269

DINFWPI(-3) 0.148771 0.068225 2.180585 0.0306 1.401064

YIIPGAP -0.0102 0.009136 -1.11674 0.2657 1.772351

YIIPGAP(-1) 0.009609 0.009371 1.025376 0.3066 1.86286

YIIPGAP(-2) 0.001267 0.009813 0.129078 0.8974 2.043568

YIIPGAP(-3) -0.00045 0.009612 -0.04697 0.9626 1.964268

DOILPR 0.015368 0.004049 3.795047 0.0002 1.263982

DOILPR(-1) 0.017369 0.004476 3.880185 0.0001 1.477237

DOILPR(-2) 0.002126 0.004565 0.465766 0.642 1.531418

DOILPR(-3) 0.016957 0.004569 3.711383 0.0003 1.443641

DEXR 0.024609 0.021692 1.134493 0.2582 1.583994

DEXR(-1) 0.043412 0.023758 1.827276 0.0694 1.900135

DEXR(-2) -0.02642 0.024022 -1.09997 0.2729 1.934397

DEXR(-3) 0.008843 0.021264 0.415849 0.678 1.515476

C -0.01314 0.048309 -0.27201 0.7859 NA

R-squared 0.448658 Mean dependent var 0.002128

Adjusted R-squared 0.400575 S.D. dependent var 0.854302

S.E. of regression 0.661422 Akaike info criterion 2.092417

Sum squared resid 75.24646 Schwarz criterion 2.367859

Log likelihood -180.687 Hannan-Quinn criter. 2.204015

F-statistic 9.331059 Durbin-Watson stat 2.003591

Prob(F-statistic) 0



Values of Variance Inflation Factor (VIF) in regression-1 show that there isno problem of multicollinearity and we did not have to drop any of the variables.It is obvious from the results that the demand factor i.e. output gaps in levelas well as in lags are not statistically significant in explaining inflation whereaswe find that the changes in crude oil prices are significant.The diagnostic test results are reported at the end in the Annex.9

To check for the robustness of our results we do the same regression with adifferent specification of the output gap. Now we calculate the output gap asthe log difference of the seasonally adjusted output and the trend output andthen we multiply that with 100 to get it in percentage term. (log_diff_ygap =(log_yiip_sa - log_hptrend01)*100) The ADF test results show that there is nounit root to the series.


Name of the variable t statistics Prob.

LOG_DIFF_YGAP -4.435722 0.0025

The Regression-2 result:Dependent Variable: DINFWPI

Method: Least Squares

Sample (adjusted): 2001M08 2017M03

Included observations: 188 after adjustments

Variable Coefficient Std. Error t-Statistic Prob. VIF

DINFWPI(-1) 0.324777 0.072453 4.482611 0 1.627644

DINFWPI(-2) -0.11452 0.076836 -1.49038 0.138 1.818391

DINFWPI(-3) 0.151599 0.068594 2.210106 0.0284 1.414304

LOG_DIFF_YGAP -0.03086 0.030118 -1.02456 0.307 1.95483

LOG_DIFF_YGAP(-1) 0.030695 0.030852 0.994908 0.3212 2.049614

LOG_DIFF_YGAP(-2) -0.00092 0.032147 -0.02864 0.9772 2.233431

LOG_DIFF_YGAP(-3) -0.0038 0.03116 -0.12208 0.903 2.113052

DOILPR 0.015502 0.00406 3.817954 0.0002 1.269047

DOILPR(-1) 0.01723 0.004482 3.844349 0.0002 1.478991

DOILPR(-2) 0.002087 0.004568 0.456994 0.6483 1.530887

(Contd...)


DOILPR(-3) 0.016966 0.004567 3.714599 0.0003 1.440566

DEXR 0.025242 0.021561 1.170733 0.2433 1.562842

DEXR(-1) 0.043366 0.023629 1.835282 0.0682 1.877053

DEXR(-2) -0.02621 0.023998 -1.09196 0.2764 1.927874

DEXR(-3) 0.009094 0.021317 0.426587 0.6702 1.520902

C -0.01343 0.048391 -0.27743 0.7818 NA

R-squared 0.447904 Mean dependent var 0.002128

Adjusted R-squared 0.399756 S.D. dependent var 0.854302

S.E. of regression 0.661874 Akaike info criterion 2.093783

Sum squared resid 75.34934 Schwarz criterion 2.369225

Log likelihood -180.816 Hannan-Quinn criter. 2.205382

F-statistic 9.30266 Durbin-Watson stat 2.005727

Prob(F-statistic) 0

In this case of regression-2 also we find that there is no problem ofmulticollinearity.10 The output gap remains to be statistically insignificant inthis case also. Whereas like in the regression-1 we find that the crude oilprices have an impact on the inflation. Another significant finding is that theexchange rate apparently does not seem to have any effect on the WPI inflation.

ConclusionWe have discussed about the three eras of the monetary policy regime in thepost-liberalisation India. The first was the era in which the guiding principlewas monetary targeting by the central bank. The effectiveness of that is notbeyond doubt as in only 4 years out of total 13; central bank could achieve itstarget. Next, RBI followed multiple indicator approach. Simultaneously, manysteps were taken for ushering in financial liberalisation in our country. Manyreforms were initiated to develop financial markets during this period. Conductingmonetary policy through policy rate and maintaining a corridor for liquidityadjustment facility was an important reform which happened in early 2000s.Price stability remained to be the main objective of monetary policy. Butrecently RBI has explicitly adopted flexible inflation targeting as its officialframework to conduct monetary policy. So, the third period can be termed asthe regime of inflation targeting. We have critically discussed the currentframework of monetary policy. We have empirically tested the validity ofarguments which are put forward to explain the phenomenon of inflation inIndia in the recent past. We have done the empirical exercise for the periodin which inflation was tried to be controlled by using the policy rate i.e. repo.



Our results suggest that inflation most probably can be better explained bythe cost push factor like change in crude oil prices and we have not found anyevidence to conclude that the output gap i.e. the demand affects inflation. Wemay therefore conclude that the Indian economy might be operating at thehorizontal section of the Phillips curve.

Notes1 RBI (1991), Shetty and Ray (2015), Ray (2013)2 RBI (1991), Shetty and Ray (2015), Ray (2013)3 Till May 2011, repo and reverse repo were announced separately. The difference

between them varied between 1% to 3%. In April 2016, RBI narrowed the differencefrom 1% to 0.5%.

4 CBLO, a RBI approved money market instrument, is a repo between three parties.While to parties are typically players like banks, insurance companies, mutualfunds, non-banking financial companies, or corporates, the middle party is an entitycalled the Clearing Corporation of India Ltd. (CCIL). CCIL performs the function ofa central clearing house and ensures the sanctity of the securities and absorb anysettlement risk. It was set up in 2001 and it launched CBLO in January, 2003.CBLO can be issued for a maximum period of one year. (Ray, 2013)

5 Repo Rate, Reverse Repo Rate, LAF, MSF, CRR, SLR, OMOs, MSS. See RBI (2016),Instruments of Monetary Policy available at https://www.rbi.org.in/scripts/FS_Overview.aspx?fn=2752

6 Government of India and RBI made an agreement on monetary policy framework on20 February, 2015. In it they agreed that the price stability, while keeping in mindthe objective of growth, is the primary objective of the monetary policy and monetarypolicy framework, in India, will be operated by RBI. It is also agreed upon that RBIwill aim to bring inflation below 6% by January, 2016. Thereafter, the target inflationfor subsequent years shall be 4% with a band of +/- 2% around it (Government ofIndia, 2015)

7 These are heat charts to show the rise in WPI and oil prices. The shade of the colorrepresents the value in the cell. Red and green signifies high and low values respectively.

8 INFWPI is WPI inflation, YIIPGAP is output gap, OILPR is crude oil price, EXR isexchange rate.

9 See Annex.10 See Annex.

ReferencesArestis, P. and Sawyer, M. (2008). A critical reconsideration of the foundations of monetary

policy in the new consensus macroeconomics framework. Cambridge Journal ofEconomics, 32:761-779.

Bofinger, P., Mayer, E., and Wollmershauser, T. (2006). The BMW model: A new frameworkfor teaching monetary economics. The Journal of Economic Education, 37(1):98-117.


Chandrashekhar, C.P. (2014). Off-target on monetary policy. Economic and Political Weekly,XLIX (9):27-30.

Clarida, R., Gali, J., and Gertler, M. (1999). The science of monetary policy: A new Keynesianperspective. Journal of Economic Literature, 37(4):1661-1707.

Friedman, M. (1968). The Role of the Monetary Policy. American Economic Review, 58:1-17.

Government of India (1998). Report of the Committee on Banking Sector Reforms (NarasimhamCommittee II)

Kaldor, N. (1986). The Scourge of Monetarism. Oxford University Press.Mohanty, Deepak and Mitra, A.K. (1999). Experience with monetary targeting in India,

Economic and Political Weekly, 34(3/4):123-32Patnaik, P. (1986). Public debt as a mode of financing public expenditure. Economic and

Political Weekly, XXI (35):1545-1552.Rangarajan, C. (1998). Indian Economy: Essays on Money and Finance. UBSPD, New

Delhi.Rangarajan, C. (2001). Some critical issues in monetary policy. Economic and Political

Weekly, pages 2139-2146.Rangarajan, C. (2009). India Monetary Policy Financial Stability and other essays. Academic

Foundation, New Delhi.Ray, P. (2013). Monetary Policy. Oxford University Press, New Delhi.Reserve Bank of India (1985). The Committee to Review the Working of the Monetary

System.Reserve Bank of India (1991). The Report of the Committee on Financial System. (Narasimham

Committee I)Reserve Bank of India (2014). Report of the expert committee to revise and strengthen the

monetary policy framework. Technical report.Shetty, S.L. and Ray, P. (2015). The evolving contours of monetary policy and commercial

banking in India. In Patnaik, P., editor, ICSSR Research Surveys and Explorations,Economics, Macroeconomics, volume 3, chapter 4, pages 117-212. Oxford UniversityPress, 1 edition.

Vasudevan, A. (2002). Evolving monetary policy in India some perspectives. Economic andPolitical Weekly, pages 1055-1061.

Weber, A., Lemke, W., and Worms, A. (2008). How useful is the concept of the natural realrate of interest for monetary policy? Cambridge Journal of Economics, 32:49-63.



Annex9. The Breusch-Godfrey Lagrange multiplier test for the residuals is

statistically insignificant indicating that there is no evidence of serialcorrelation. Also, Breusch-Pagan-Godfrey test show that there is no evidenceof heteroscedasticity.Breusch-Godfrey Serial Correlation LM Test: F-statistic 0.559137 Prob. F(2,170) 0.5728 Obs*R-squared 1.228597 Prob. Chi-Square(2) 0.541 Heteroskedasticity Test: Breusch-Pagan-Godfrey F-statistic 0.298157 Prob. F(15,172) 0.9951 Obs*R-squared 4.764506 Prob. Chi-Square(15) 0.9939 Scaled explained SS 4.183923 Prob. Chi-Square(15) 0.9971

The ADF test of the residual shows that there is no evidence of unit root at1% level.

t-Statistic Prob.* Augmented Dickey-Fuller test statistic -5.099164 0.0002

10. The diagnostic results for the second regression The Breusch-GodfreyLagrange multiplier test for the residuals is statistically insignificantindicating that there is no serial correlation.Breusch-Godfrey Serial Correlation LM Test: F-statistic 0.726773 Prob. F(2,170) 0.485 Obs*R-squared 1.593824 Prob. Chi-Square(2) 0.4507 Heteroskedasticity Test: Breusch-Pagan-Godfrey F-statistic 0.295458 Prob. F(15,172) 0.9954 Obs*R-squared 4.722456 Prob. Chi-

Square(15) 0.9942

Scaled explained SS 4.240084 Prob. Chi-Square(15)

0.9968

Breusch-Pagan-Godfrey test show that there is no heteroscedasticity. Lastlythe Augmented Dickey Fuller test rejects the null hypothesis of existence ofunit root in the residuals at 1% significance level.Augmented Dickey-Fuller test statistic: t statistic -5.106430 Probability: 0.0002


Assessment of Climate Induced Vulnerabilityin Bundelkhand Region, India: An


Surendra Singh* & Alka Singh**

ABSTRACT

The study investigates the degree of climate induced vulnerability among thesurveyed households of two agro-intensive districts of Bundelkhand region partof Uttar Pradesh, India viz., Jhansi and Jalaun. By using an indicator approachand IPCC vulnerability assessment method, the composite climate vulnerabilityindex has been developed. Study found that surveyed households are highlyexposed and sensitive due to changes in rainfall pattern and increase intemperatures. More than 90 percent farmers in both districts perceived thatkharif season became hotter and frequencies of droughts has increased over thelast 10 years. Only 29 percent and 22 percent farmers have diversified theircropping pattern in Jalaun and Jhansi respectively. Lower adaptive capacitydue to lack to non-farm employment opportunities, agriculture is the sole sourceof income and there is least likelihood of crop and income diversification. Thefact of illiteracy raises the degree of climate vulnerability in the Bundelkhandregion. Water conservation through rain water harvesting, construction of newponds and check-dams would be a possible solution for present water crisis.Shift from high water intensive cropping pattern like wheat, rice and sugarcanetowards less water intensive crops such as kharif pulses, minor cereals wouldbe a better adaptation strategy to increase net farm returns.Key Words: Climate vulnerability index, climate change and adaptationstrategies

* Senior Research Scholar, Department of Economics, Babasaheb Bhimrao AmbedkarUniversity, Lucknow, U.P. email id: [email protected]

** Research Scholar, Department of Economics, Babasaheb Bhimrao Ambedkar University,Lucknow, U.P. email id: [email protected]

ARTICLE 4



IntroductionThe degree of climate induced vulnerability in the tropical countries likeIndia is higher, with low adaptive capabilities, sole dependence on farming inthe rural parts, lack of non-farm employment and complex social structure ofthe society (IPCC, 2014b). Monsoon rainfall misleads the farmers even in thehigh yield area as variability during the monsoon rainfall turns out to bepretty high. More than 60 percent cropped area in Bundelkhand is rainfed(Goswami et al., 2006 and IMD, 2015). Temperatures reach up to the thresholdlevel. These features of the Indian farming sector motivated us to investigatethe degree of exposure, sensitivity and adaptive capabilities in the most backwardregion that is Bundelkhand part of Uttar Pradesh.Bundelkhand region comes under semi-arid agricultural zone. Studies claimedthat agriculture in the semi-arid areas are particularity exposed to the impactof climate change due to scarcity of the water resources (Kavi Kumar, K. S.,and Jyoti P., 2001b; Giertz et al., 2006 and Gbetibouo, G and Ringer, C.,2009). Further, in the semi-arid regions of Asia, water use in farming wouldincrease at least 10 percent for an increase in temperature of 10C (Fisher etal., 2002). Efforts to offset declining surface water availability due to increasein precipitation variability will be hampered by the fact that ground waterrecharge will decrease considerably in already water-stress regions like,Bundelkhand, where vulnerability is often exacerbated by the rapid increasein population and water demand. In Bundelkhand region, farmers also haveto contend with other extreme natural resource challenges and constraintssuch as poor soil fertility, pests, crop diseases, and a lack of access to improvedseeds. These challenges are usually aggravated by periods of prolonged droughts/floods and are often particularly severe during El Nino events (IPCCa, 2014).

Data Sources and Study AreaThe present study is based on the field survey data, collected during May2015 from the two districts of Bundelkhand region of Uttar Pradesh, viz.,Jhansi and Jalaun1 (Figure 1). The reason behind for selection of these twodistricts is while Jhansi is quite developed Jalaun is not. Jhansi is welldeveloped in terms of soil quality, water resources, accessibility of credit,road connectivity, rural electrification and market accessibility. On the otherhand, Jalaun is underdeveloped with the lowest accessibilities of these extensionservices.Jhansi and Jalaun have five Tehshils each. So, from each Tehshil, a block ischosen. And each block, a village is chosen. From each village, 20 householdsare selected. Thus, multi-stage sampling comprised two districts, 10 tehsils,10 blocks, 10 villages and 200 households, which were farmer households. Aschedule was canvassed to these selected households to check their vulnerability.

43Realizing Ambedkar's Vision without Reservation...Figure 1: Map of Bundelkhand Region

Source: Google Map

Data on climate induced exposure, sensitivity and adaptive capabilities havebeen collected. Exposure indicator assessed change in rainfall pattern, hotterKharif season, increase in the frequencies of droughts and decline in thewater table over last 10 years. Sensitivity indicator assessed the impact ofdrought on farming season. In Bundelkhand, heat waves are quite frequent,temperature increases both during the day and night, and farmers solelydepend on farming and belong to the below poverty line category. Adaptivecapability indicator was assessed on the basis of whether household had cropinsurance, whether there was shift in cropping pattern from high water intensivecrops to low water intensive crops, whether one switched to non-farm activities,whether there was improvement in irrigation facilities, whether one plantedtrees surrounding the fields, whether one was using early maturing varieties,and one consulted with Kisan Call Centre.

Estimation MethodThe indicator based approach is used in a specific context. A set or combinationof indicators (proxy indicators) measures the vulnerability by computing indices.Indicators may be average or weighted averages for selected variables. Thesuitability of this approach is that it can be applied at any scale, such ashousehold, district and at country level (Malone L. E. and Engle L. N., 2011).The indicator based approach consists of three core elements, viz., exposure,sensitivity and adaptive capacity (McCarthy et al., 2001).The present study estimates climate vulnerability index by using Iyenger andSudharshan (1982) methodology, which is as follows.

Assessment of Climate Induced Vulnerability in Bundelkhand...


...(1)

Here is the original sub component for block i and is theminimum and maximum values respectively. For each sub component maximumand minimum values are determined, using data from all the ten blocks. Forvariables that represents frequencies such as percentage of farmers who havechanged their crops, the minimum value was set at 0 and maximum value at100. Further, if predicted value of a sub-component is negatively associatedwith vulnerability, the standardisation-index is calculated as follows:

...(2)

To neutralise the variation in the data sets, weight for each sub-componentare estimated as follows:

...(3)

Here, Wi is the weight (0<W<1 and that is assigned to ith sub-component (Chinnadurai et al., 2012, p. 12); Var(CZI) is statistical variationacross standardisation-indices for all variables. In equation (3), weight reflectsimportance of an individual variable. While, K is estimated as follows:

...(4)

Finally, block wise livelihood climate vulnerability index is calculated as follows:CVIi = EXPi + SENSi + ADPi ...(5)

Where, CVIi is climate vulnerability index, EXPi is exposure index, SENSi issensitivity index and ADPi is adaptability index for the ith block.

Farmers’ Response on the Three ComponentsTable 1 shows farmer’s responses on climate induced exposure, sensitivityand their adaptation strategies to reduce the degree of exposure and sensitivityin the Jalaun and Jhansi districts. In both districts (Jalaun and Jhansi),more than 90 percent farmers are exposed from the climate induced events,viz., kharif season becoming hotter, increasing frequencies of droughts events


and declining rainfall. Further, due to back-to-back drought years, waterresources (both surface and ground) level has declined over the last 10 years.Farmers’ reliance on natural resources for livelihood security, minimum basicamenities, belonging to below poverty line (BPL) category, female-headed-ness of households, low level of diversification in income and cropping pattern,and agriculture being the sole source of income have increased the degree ofsensitivity. It is found that more than 90 percent farmers are highly sensitiveto the climate induced factors such as adverse impact of drought on currentcropping pattern and heat waves in the harvesting period. Only 29 (Jalaun)and 22 (Jhansi) percent farmers have diversified their cropping pattern andremaining farmers still continue to follow the traditional cropping pattern,where food crops are mainly grown (Table 1). The possible reasons for lowcrop diversification are food security, small operational land size, and higherdependency on agriculture for the livelihood security. It is now a reality ofIndian farm sector that a vast majority of farmers have now become consumers.Pettengell (2010) argued that farmers with smallholding are disproportionatelyvulnerable to the impacts of climate change on account of poverty, marginalisationand exclusive reliance on natural resources like farming.

Table 1: Farmer’s Responses on Climate induced Exposure, Sensitivity andAdaptation Strategies

Major Components

Sub-components Jalaun Jhansi

Exposure

Percentage of households who feel that rainfall is declining over the last five 10 year

77 56

Percentage of households who perceive that summer days are becoming more hotter

90 98

Percentage of households who perceive that frequency of drought has increased over the last ten years

90 95

Percentage of households who perceive that water table has declined over the last 10 years

93 96

Sensitivity

Percentage of households who perceive that drought has high impact of on the farming system

90 95

Percentage of households who perceive that heat waves have become more frequent

97 96

Percentage of households who perceive that temperature has been increasing over the last 10 years

90 43

Percentage of households who reported that agriculture is their only source of income

70 75

Average crop diversity index (range: 0-1) 29 22 Average number of households who is dependent on unemployed 64 62

(Contd...)



Adaptive Capacity

Percentage of households having crop insurance 50 0

Percentage of households that changed their cropping pattern 24 9

Percentage of households who switched to non-farm activities 33 6

Percentage of households using improved irrigation facilities 35 81

Percentage of households who planted trees sounding the fields 51 70

Percentage of households who are growing early maturing varieties 48 28

Percentage of households who are illiterate 34 25 Percentage of households who consulted Kisan Call Centre 20 74

Source: Estimated from the Field Survey Data. Note: Figures are in Percentage. Average

crop diversity index calculated by the inverse of (the number of crops grown by ahousehold+1). For example, a household that grows rice and cotton will have a cropdiversity index= 1/(2+1)= 0.33

Adaptation strategies are in the centre in the climate change related studies.By using differential adaptation strategies, farmers are trying to moderatethe degree of vulnerability in the highly exposed and sensitive tropical regionssuch as Bundelkhand. Crop insurance, cropping pattern change, switch tonon-farm activities, increase in irrigation intensity, use of early maturingvarieties and use of information technology are key adaptation strategiesthat are followed by the farmers to cope with climate induced exposure andsensitivity. Although, current adaptation strategies have potential role inmoderating the climate induced vulnerability but the degree of these differentialadaptation strategies is much lower as compared to exposure and sensitivity(Table 1). It is found that none of farmers had crop insurance coverage,which provides extra protection if crop failure occurred. However, increasein irrigational sources and plantation surrounded the field are followed bythe more than 70 percent (Table 1).

Climate Vulnerability IndexBy using equation (5) composite weightage climate vulnerability index hasestimated (Table 2). The estimated weightage climate vulnerability indexshows that Kalpi and Moth blocks are highly exposed, Jalaun and Tahroliblocks are highly sensitive and Kalpi and Badagaon blocks have highestadaptive capabilities. Further, overall climate vulnerability index scores atblock level shows that highest vulnerability index scores are for Kalpi inJalaun (15.143) and for Badagaon in Jhansi (9.728). In totality also, Jalaundistrict (13.159) has much higher vulnerability index compared to the Jhansidistrict (7.159).

47Realizing Ambedkar's Vision without Reservation...Table 2: Climate Vulnerability Index

District Block Major Components

Exposure Sensitivity

Adaptive Capacity

Climate Vulnerability Index

Jalaun

Orai 1.030 4.090 9.624 14.743

Konch 0.989 3.995 9.769 14.754

Jalaun 1.005 5.692 6.714 13.410

Madhavgarh 1.131 3.960 2.653 7.744

Kalpi 1.275 3.512 10.356 15.143 Jhansi

Badagaon 1.035 3.527 5.166 9.728

Mauranipur 1.061 2.290 2.915 6.266

Moth 1.100 3.537 1.724 6.361

Garotha 1.197 2.598 3.021 6.816

Tahroli 1.055 3.546 2.025 6.626 District Jalaun District 1.086 4.250 7.823 13.159

Jhansi District 1.090 3.099 2.970 7.159

Source: Estimated from Field Survey Data

Apart from these findings, study also reveals some interesting feature ofvulnerability at the community level from field survey data. The major findingsare as follows:• The block with highest adaptive capacity is also most exposed to the

impacts of climatic variability. In other word, high exposure and sensitivityincrease degree of vulnerability and at the same time if respondentshave high adaptive capacity than the magnitude of vulnerability is decline.Similar results found in the study that Kalpi block has highly exposedand at the same time high adaptive capacity to deal with climate changeand variability become least vulnerable.

• The results show that the Kapli block deemed to be most vulnerable tosensitivity in extreme events (drought and heat waves) and climate change/variability do not always overlap with the most vulnerable populations.Rather the study confirms the findings by Gbetibouo et al., (2009) in thecase of South Africa, the region most vulnerable to climate change andvariability also have a higher capacity to adapt to climate change.

• The present study confirms that the degree of vulnerability varies fromblock to block and community to community. This suggest that householdswith less sensitivity to climate risks are unlikely to invest in risk reductionstrategies, while households with relatively high sensitivity are more



likely to respond to these sensitivities through options that are availablefor them. Though Kalpi block stands highest in the adaptive capacityindex. Yet its high vulnerability suggests that policy intervention to reducesensitivity and exposure of the households to deal with risks of climatevariability and change is highly warranted.

Conclusion & Policy PrescriptionThe study has made an attempt to investigate the nature, magnitude anddeterminants of vulnerability in the Bundelkhand. Farmers are extremely exposedto climate change. Increase in temperatures, variability and decline in rainfallduring Kharif season during the last ten years created agricultural crisis.Traditionally, farmers in this region had grown mainly food grains to sustainlivelihoods. However, back-to-back drought episodes, the all types of waterresources (surface and ground water) have dried. Therefore, it is no longerpossible to maintain traditional varieties of crops, which are more waterconsumptive. Farmers have been applying differential adaptation measures tocope and reduce the degree of exposure and sensitivity like, switch to non-farmemployment activities, improved irrigation facilities, use of early maturing varietiesand consulting with Kisan Call Centre. However, the coverage of these differentialadaptation measures very limited. Therefore, less crop diversification, highdependence on agriculture and lack of non-farm employment opportunity increasesthe degree of sensitivity. From policy intervention perspective, government aswell as farmers should conserve water resources (surface as well as groundwater) by using the community participation principle. Less water consumingand high temperatures tolerant horticultural plants can be introduced in smalland marginal farms. It is observed that farmers have planted trees surroundingthe fields. It has a resilient strategy to mitigate the adverse impact of climatechange. However, in the Jalaun district only 51 percent farmers adopted this.Therefore, it should be expanded more with differential plantation.

Notes1. Bundelkhand region lies divided between two States, viz., Uttar Pradesh and Madhaya

Pradesh. It consists 13 districts, seven in Uttar Pradesh viz., Jhansi, Jalaun, Hamirpur,Banda, Lalitpur, Mahoba and Chitrakoot, and six in Madhya Pradesh viz., Datia,Tikamgarh, Panna, Damoh, Sagar and Chhatarpur. The present study covers onlytwo districts of Uttar pradesh, viz., Jhansi and Jalaun.

ReferencesGbetibouo, G and Ringer, C. (2009), “Mapping South African Farming Sector Vulnerability

to Climate Change and Variability: A Sub-national Assessment, IFPRI DiscussionPaper 00885, pp.1-12.


Giertz S., Diekkruger B., Jaeger A., Schopp M. (2006), “An Interdisciplinary ScenarioAnalysis to Assess the Water Availability and Water Consumption in the UpperOum Catchment in Benin, Advance Geoscience, Vol. 9, No. 1, p.11.

Goswami B.N., V. Venugopal, D. Sengumpta, M.S. Madhusoodanan, Prince K. Xavier (2006),“Increasing Trend of Extreme Rain Events Over India in a Warming Environment”,Science, Vol. 314, No. 5804, pp. 245-250.

Government of India (2015), “Annual Report”, Indian Meteorological Department of India,Ministry of Earth Science, Government of India, New Delhi, pp. 12-19.

IPCC (2014a), “Climate Change: The Physical Science Basis: Summary for the PolicyMakers”, Contribution of Working Group I to the Fifth Assessment Report of theIntergovernmental Panel on Climate Change, p. 124.

IPCC (2014b), “Impact, Adaptation, and Vulnerability”, Intergovernmental Panel on ClimateChange, p. 110.

Iyengar, N.S. and P. Sudarshan (1982), “A Method of Classifying Regions from MultivariateData”, Economic and Political Weekly, Vol. 17, No. 51, pp. 1-5.

Kavi Kumar, K.S., and Jyoti P. (2001b), “Indian Agriculture and Climate Sensitivity”,Global Environmental Change, 11, pp. 147-154.

Pettengell C. (2010), “Climate Change Adaptation: Enabling People living in Poverty toAdapt, Oxfam International Research Report, Oxfam International, Oxford, UK, pp.110-115.

Malone, L. Elizabeth and Engle L. Nathan (2011), “Evaluating Regional Vulnerability toClimate Change: Purposes and Methods”, Climate Change, Vol. 2, No. 1, pp. 1-15.

McCarthy, J.J., Canziani, O.F., Leary, N.A., Dokken, D.J., White, K.S. (2001), “ClimateChange 2001 (eds.) Impacts, Adaptation and Vulnerability: Contribution of WorkingGroup II to the third Assessment Report of the Intergovernmental Panel on ClimateChange, Cambridge University Press, Cambridge, p. 995.

Pettengell C. (2010), “Climate Change Adaptation: Enabling People living in Poverty toAdapt, Oxfam International Research Report, Oxfam International, Oxford, UK, pp.110-115.

Ariverarasan, A., Chinnadurai M., Alagumani T. and Swaminathan B. (2015), “DevelopingFood Security Index for Vulnerable Sections of Rural Households in PerambalurDistrict of Tamil Nadu”, Trends in Bioscience, Vol. 8, No. 1, pp. 48-53.



Measuring the Stance of MonetaryPolicy for India

Gyanendra Pratap Singh*

ABSTRACT

This paper attempts to construct a quantitative measure of monetary policystance for India. Since April 1998, the Reserve Bank has been monitoring andanalyzing multiple indicators both quantity variables such as monetary aggregates,credit growth, fiscal deficit etc. as well as rate variables such as interest rates,exchange rates, asset prices etc. Instead of relying on any single instrument, itwould be better to construct an index to assess overall monetary policy stance.The monetary policy index (MPI) has been constructed that take interest rate(call money rate) and yields on government treasury bill rates simultaneouslyinto consideration while evaluating the stance of monetary policy. Overall empiricalresults show that the Reserve Bank of India has adopted both expansionaryand contractionary monetary policy stance in response to development inmacroeconomic conditions in the economy.JEL classification: E51, E52, E58.Keywords: Monetary policy stance, Monetary policy index (MPI), Yield SpreadIntroductionThere is wide spread consensus among economists and policy makers thatmonetary policy affects macroeconomic variables such as real GDP and inflation.However, there is far less agreement about how exactly monetary policy actionsare transmitted. Therefore, understanding the effect of monetary policy onthe economy has remained the most important and controversial issue among

* D. Phil Scholar, Govind Ballabh Pant Social Science Institute, Jhusi, Allahabad, Universityof Allahabad. This work forms part of my M.Phil thesis submitted in 2017. Author isvery grateful to Prof. U. Kalpagam and Prof. P.K. Chaubey for offering useful commentsand suggestions on earlier version of this paper. Email: [email protected]

ARTICLE 5



the policy makers in macroeconomics. But there is little hope that economistsor policy makers can obtain quantitative estimates of the impact of monetarypolicy on real economic activities without the knowledge of current and pastmonetary policy stance (Bernanke and Mihov, 1998). Moreover, measurementof policy stance is also important for empirical study of the past behavior ofthe central bank. Apart from this, knowledge of how “tight” or “loose” itscurrent stance helps the central bank in achieving its final targets of low andstable inflation, sustained growth and financial stability. Traditionally, therising growth of money supply or decreasing interest rate was assumed toindicate “expansionary” monetary policy, keeping in mind the objectives ofgrowth and price stability while decreasing growth of money supply or increasinginterest rate indicate “contractionary” monetary policy.However, during post-liberalization period, Indian financial system witnessedmajor structural changes. The traditional measures of the policy stance suchas growth of monetary aggregates (monetary base, money supply) have lostits luster due to financial innovations and deregulation rendering money demandfunction unstable. In response, the conduct of monetary policy has also undergonemajor transformation with greater focus on price variables rather than onquantity variables. In particular, since April 1998, the Reserve Bank has beenmonitoring and analyzing multiple indicators both quantity variables such asmonetary aggregates, credit growth, fiscal deficit etc. as well as rate variablessuch as interest rates, exchange rates, asset prices etc. Based on trends ofthese multiple indicators, the Monetary Policy Committee (MPC) takes decisionto change or not to change the single policy instrument- the repo rate. However,tracking the movements of one policy instrument, as usually done for assessingmonetary policy stance could be misleading. This might happen due to changesin macroeconomic conditions. That is, policy stance cannot be termed ascontractionary if the central bank raises policy interest rate in response to highinflationary pressure or slowdown in economic activity. Therefore, instead ofrelying on any single instrument, the comprehension of monetary policy stancewould be better if we can construct a single index.Against this background, this paper attempts to construct a quantitative measureof monetary policy stance for India. The aim of construction of monetarypolicy index (MPI) is to take both interest rate and yield on governmenttreasury bills of short and long term maturity into consideration. There iswide literature on tem structure of interest rates comprising informationabout policy stance. As, Estrella and Mishkin, (1997) mentioned the termstructure of interest rates as an indicator of market expectations of futurereal activity and inflation or of the stance of policy. In particular, theyinvestigated the informational and predictive content of the term structurewith regard to the final targets of monetary policy, namely inflation and realactivity across European economies and the United States. In many cases,

Measuring the Stance of Monetary Policy for India


the yield spread defined as the difference between the three month governmentsecurity rate (BILL) and the ten year government security rate (Bond) isfound containing significant predictive power for real activity and inflation.Thus, transmission of monetary policy is viewed as running from short terminterest rates managed by central banks to longer term interest rates thatinfluence aggregate demand (Goodfriend, 1998). Jadhav (2006) has alsodemonstrated that term structure of interest rates or yield curves containpotential and useful information about the monetary policy stance. A lowyield spread reflects relatively tight monetary policy and a high yield spreadreflects a relatively accommodative monetary policy. During the period oftight monetary policy, long-term interest rates rise (fall) less than the short-term rates, resulting in a flatter (steeper) yield curve.Therefore, we have decided to construct a monetary policy index (MPI) basedon three important interest rates; call money rate, 91-day Treasury Bill Yieldpercent per annum and 10-year Government Securities Yield. The MPI includesonly rate variables due to enhanced reliance on rate channels than the quantitychannel for monetary policy formulation. One limitation of this paper is thatit does not include any measure derived directly from policy pronouncements.The remainder of this paper is organized as follows: Section 1 gives a briefaccount of the Reserve Bank’s monetary policy. Section 2 presents literaturereview on monetary policy stance. Section 3 specifies the procedure forconstruction of monetary policy index (MPI). Section 4 reports empirical resultsbased on computed monetary policy index (MPI). Section 5 presents conclusion.

Monetary Policy of the Reserve Bank of IndiaMonetary policy refers to the use of instruments under the direct control ofthe monetary authority to regulate availability, cost and use of currency andcredit. The Reserve Bank with wide mandate and many responsibilities conductsmonetary policy in India. According to the preamble of the Reserve Bank ofIndia (RBI) Act, 1934, the objectives of the Reserve Bank are “to regulate theissue of Bank notes and the keeping of reserves with a view to securingmonetary stability in India and generally to operate the currency and creditsystem of the country to its advantage” (RBI Act, 1934; page, 11).Price stability continues to be the principal objective of the monetary policywhile ensuring adequate flow of credit to productive sectors to support economicgrowth and maintaining orderly conditions in the financial markets continueto be other important goals. Here price stability does not mean zero inflation.It simply means low and stable inflation, a level beyond which costs of inflationbegin to rise steeply and affect growth adversely. Price stability is the dominantobjective as Rangarajan (2011) argued that growth without price stabilitywould be self-defeating.


With the amendment of the Reserve Bank of India Act in 2016 the primaryobjective of monetary policy continues to remain price stability while keepingin view the objective of economic growth. For the Reserve Bank to achieve itsmandate effectively, the Monetary Policy Committee (MPC) has been constitutedunder the amended RBI Act to determine the policy repo rate in order toachieve the specified medium-term inflation target of 4 per cent, within aband of +/- 2 per cent. Since price stability alone not necessarily can ensurefinancial stability, the latter is also another important objective of monetarypolicy.

The Importance of Price StabilityAchieving price stability is important but it is just as important as to maintainit. High rates of inflation in public memory have long lasting adverse effects.Households and businesses are reluctant to finance long term investmentbecause a jump in inflation would cause their interest payments to rise sharply.Moreover, high and variable inflation would destroy the value of their financialassets such as bonds. Volatility in prices also creates uncertainty in decision-making. Rising prices affect savings adversely while at the same time makespeculative investment more attractive. An environment of high and unstableinflation leads to loss of output significantly through misallocating scarceresources. Apart from this, inflation as a regressive tax affects poor peoplemost adversely. In a period of rising prices, the gap between revenues andexpenditures widens. That is, expenditures tend to grow at a faster rate thanrevenues making fiscal consolidation task more difficult. Therefore, keepingeconomy on a disinflationary glide path through reining in inflation andanchoring inflation expectations must be the top priority of the central banker.

Review of literature2

The construction of monetary policy index (MPI) in some variant becamepopular in several countries particularly during the second half of the 1990sas a way of interpreting the monetary conditions and their effect on economy.The Bank of Canada started the construction of monetary conditions index(MCI) during the early 1990s taking interest rate and exchange rate intoconsiderations. The Reserve Bank of New Zealand also adopted MCI as astance measure of monetary conditions. Many other central banks also adoptedMCI as a useful indicator of overall monetary conditions. In their classicpaper, Bernanke and Blinder (1992) argued that the interest rate on federalfunds is extremely informative about future movements of real macroeconomicvariables. They presented evidence consistent with the view that monetarypolicy works at least in part through ‘credit’ (bank loans) as well as through‘money’ (bank deposits). They have also presented the tightness or easiness ofmonetary policy stance using federal fund rate. After estimating three variables



through VAR model of order six namely fund rate, log of CPI and prime age(25-54) male unemployment, they found inflation shocks drive up the fundrate with the peak effect coming in 5 to 10 months and then decaying veryslowly, while unemployment shocks push the fund rate in the opposite directionbut with somewhat longer lags and smaller magnitude.Friedman and Kuttner (1992) examined empirical findings based post-1980sUS experience and concluded that close and reliable relationship betweenmoney and non-financial economic activity (output) does not exist. They foundthat relationship between money and nominal income or between money andeither real income or prices separately is however significant if data is takenfrom 1970s onwards. But including the data from 1980s weakens thisrelationship. Another major finding is that the spread between the commercialpaper rate and the Treasury bill rate consistently contains highly significantinformation about future movements in real income. By reporting results fora variety of significance tests and forecast error variance decompositions,they seek to establish whether fluctuations in money or interest rates areuseful for predicting subsequent fluctuations in income and prices. Bernankeand Mihov (1998) developed a VAR based methodology for measuring monetarypolicy stance. They adopted a strategy for measuring monetary policy stanceby using prior information about central bank operating procedures, in additionwith VAR estimation techniques i.e. Generalized Moment Method (GMM).Using this framework, they are able to compare existing approaches to measuringmonetary policy shocks and derive a new measure of policy innovations baseddirectly on estimates of the central bank’s operating procedures. A principalconclusion is that no simple measure of policy is appropriate for the entire1965-1996 period.Bhattacharya and Ray (2007) developed a measure of the monetary policystance from the detailed reading of various monetary policy announcementsin India from 1973 to 1998. Based on various circulars on monetary andcredit policy, authors obtained policy measures from qualitative terms toquantitative numbers. Authors prepared this narrative index of monetarypolicy stance by interpreting the objectives of monetary policy and the rationaleof policy measures in terms of its prospective impact on monetary expansionand thereby on inflation and economic activity. According to the proposedmeasure, the stance of monetary policy has been mildly contractionary overthis period with its emphasis on inflation control. Apart from narrative approach,they also applied a vector autoregression model using three variables output,prices and “measure” of monetary policy stance. The results indicate thatmonetary policy had been more effective in controlling inflation vis-a-visstimulating output growth. Moreover, the results are quite robust as changesin ordering of variables did not affect the findings and broadly consistentwith results derived from generalized impulse responses.


Samantaraya (2009) attempted to measure monetary policy stance byconstructing a monthly monetary policy index (MPI) for post-reform periodfrom April 1996 to June 2008 in India. His approach of constructing MPIfollows the method human development index constructed by UNDP. Hesubstituted three indicators of HDI by broad money growth, call money rateand the information in the governor’s policy statements3. From the movementof MPI he observed that the RBI broadly followed easy money policy since late1996 up to early 2004 with temporary tightening during 1997-98 and mid-2000. The MPI also captured tight money policy since late 2004 in the face ofapparent signs of overheating. In order to analyze the impact of monetarypolicy on various macroeconomic indicators, he also plotted movement of MPIvis-à-vis interest rates, bank credit, inflation, industrial growth graphically.Behera et al. (2015) argued that the concept of constant natural interest rateto assess the stance of monetary policy could be misleading because of the timevarying nature of the natural interest rate. Using three alternative specificationof model drawing on the Ramsay’s growth model and the New-Keynesian macro-dynamics, and applying the Kalman filter estimation technique, they foundthat India’s natural real interest rate in Q4 of 2014-15 was between 0.6 percent to 3.1 per cent, even though core estimates point to a narrower range of1.6 per cent to 1.8 per cent. These estimates indicate that the real interestrate gap was negative in India for a major part of the last about ten yearswhen CPI inflation was persistently high, implying that monetary policy stanceof the Reserve Bank was largely accommodative rather than anti-inflationary.

Construction of Monetary Policy IndexMy approach of MPI construction is partly similar to that of Samantaraya(2009) but it differs in two respects; first, we use geometric mean instead ofarithmetic mean for calculating the final index. Geometric mean is used as itis better measure of average than arithmetic mean because the effect ofextreme values (outliers) is reduced. And also because of HDI is now constructedusing geometric mean. Second, we use only rate variables instead of quantityvariables – broad money growth or any measure from policy pronouncements.To assess the stance of monetary policy, we have constructed a monetarypolicy index (MPI) based on three key interest rate variables; weighted averagecall money rate4, 91-day Treasury Bill Yield percent per annum and 10-yearGovernment Securities Yield. The monetary policy information contained incall money rate is superimposed with the information content on 91-day TreasuryBill Yield percent per annum and 10-year Government Securities Yield. TheMPI is constructed with the help of three sub-indices. Each sub-index iscomputed by the following formula:

SIit = [Act. (Xit) - Min. (Xi)] / [Max. (Xi) - Min. (Xi)] ...(1)



Where Xit = Monetary Policy Indicators. i = 1, 2, 3.That is X1 = Call Money Rate.X2 = 91-day Treasury Bill Yield percent per annum.X3 = 10-year Government Securities Yield percent per annum.Here Act., Min., and Max. denote actual value, minimum value and maximumvalue of indicator respectively. While SIit and Act. (Xit) are for the period t,minimum and maximum are historical for the period under consideration.Formula (1) gives the monthly values of the three sub-indices from April2000-01 to March 2015-16. All the data have been taken from the ReserveBank of India site: http://dbie.rbi.org.in. The sample period of this study runsfrom April 2000-01 to March 2015-16.Starting with first sub-index5 SI1, this index is based on weighted averagemonthly call money rate. For calculation of SI1, Min.(X1) = 0.73 (the lowestcall money rate for 2000-15 periods) and Max.(X1) = 14.07 (the highest valueof call money rate for this period). The second sub-index SI2, which is based91-day Treasury Bill Yield. For calculation of SI2, Min.(X2) = 3.116 (the lowestrate for 2000-15) and Max.(X2) = 11.141 (the highest value for the sampleperiod).The third sub-index SI3, which is based on 10-year Government SecuritiesYield. For calculation of SI3, Min.(X3) = 5.105 (the lowest rate for the period2000-15) and Max.(X3) = 11.805 (the highest value for this period). Finally,MPI is computed by using geometric mean of these three sub-indices. MPI = {(1-SI1)×(1-SI2)×(1-SI3)}1/3

The value of MPI lies between ‘0’ to ‘1’. A higher value of MPI indicatesmonetary expansion while lower value indicates monetary contraction. Thecomputed value of MPI for each month in the last fifteen years is given in theTable in Appendix. Months are coded as year in four digits followed by thecode for month, beginning with M01 for April and ending with M12 for March.For instance, 2003M02 will mean May 2003 while 2007M11 will mean February2007. The Appendix Table would reveal the value of MPI ranges between0.02 (that is in August 2013) to 0.88 (that is in April 2009).

The empirical resultsWe can categorize the Reserve Bank’s monetary policy stance in the lastsixteen years as “strongly contractionary”, “mildly contractionary”, “neutral”,“mildly expansionary” and “strongly expansionary” depending on the value ofMPI for particular month of each year. Since the value of MPI lies between‘0’ to ‘1’, we can choose only between them. We follow standard literature(Bernanke and Mihov, 1998; Bhattacharya and Ray, 2007) for categorizingthe stance into only five ranges.


Treating MPI equal to 05 as neutral, gives us scope for accepting values <0.5as contractionary and >0.5 as expansionary. Within contractionary policy stance,we have a division at 0.3 value of MPI between mildly contractionary andstrongly contractionary. Likewise, we have divided expansionary stance intomildly and strongly expansionary at 0.8 value of MPI. We have coded themas -2, -1, 0, +1 and +2 from lower end to upper end. Phase division is givenin Table 1.

Table: 1 Monetary Policy Stance in India

Categories of MPI Code Months StronglyContractionary MPI 0.30

-2 JUN2000-AUG2000, OCT2000-JAN2001, MAR2006, JUL2013-AUG2013

Mildly Contractionary 0.30 MPI 0.50

-1 APR2000, SEP2000, JAN2000-OCT2001, JUN2008-OCT2008, MAY2011-MAR2012, SEP2013-DEC2014, FEB2014

Neutral MPI = 0.50

0 APR2007, JAN2014

Mildly Expansionary 0.50 MPI 0.80

1 OCT2001-MAR2002, SEP2004-MAY2008 (exceptMAR2006)

Strongly Expansionary MPI 0.80

2 APR2003-AUG2004, JAN2009, APR2009-NOV2009

Source: Compiled by authors from the Monetary Policy index.

From Table 1, we can observe that the Reserve Bank has followed stronglycontractionary monetary policy during period from June 2000 to August 2000,then again from October 2000 to January 2001 and July-August 2013. Apartfrom this, March 2006 is the when monetary policy has been stronglycontractionary. The period from January 2000 to October 2001 and fromJune2008 to October 2008, including April and September 2000 show a mildcontraction in policy stance. When WPI inflation was inching up due to crisisdriven easy monetary policy, the Reserve Bank started anti-inflationary stancethrough mild contraction in its policy during March 2011 to May 2011. Thenagain, the Reserve Bank had to move towards mildly contractionary policy todefend rupee which was coming under pressure against dollar during September2013 to December 2014 including February 2014. April 2007 and January2014 are two months when policy stance was neutral that is neithercontractionary nor expansionary.The Reserve Bank’s policy stance was mildly expansionary during periodsince October 2001 up to March 2002 and since September 2004 up to May2008 with temporary contractionary in March 2006. The strongly expansionarymonetary policy was adopted by the Reserve Bank since April 2003 up toAugust 2004 and from April 2009 to November 2009 including January 2009.During major periods between 2001 and 2007, GDP growth was 8 percent or



more, WPI inflation was around 5 percent or less. Money supply (M3) hasgrown at around 15 percent or more. During the year 2009, the policy stancewas expansionary due to crisis driven easy policy measures. This is consistentwith mildly and strongly expansionary monetary policy followed in these periods.

Chart: 1 Trend in Key Macroeconomic Variables

0.0

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GDP at FC

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Source: The RBI database on Indian Economy.

Monetary Policy Stance and Policy Interest RateAs an emperical matter, low interest rate is a sign that monetary policy hasbeen expansionary in the sense that the quantity of money has grown rapidly.On the other hand, high interest rate is a sign that monetary policy has beencontractionary in the sense that the quantity of money has grown slowly.However, monetary authority can assure low nominal interest rate by engasingin a deflationary monetary policy. Similarly, it can assure high interest rateby engasing in an inflationary policy and accepting a temporary movement ininterest rates in the opposite directions. The screenshot 1.1 indicates veryclose and instant negative assosition between interest rate movement and theMPI. Temporary monetary policy tightening during 2000-01 witnessed temporaryshooting up of the policy interest rate. The period between 2001 and 2006 hasseen broadly expansionary monetary policy which is consistent with oppositemovement in call money rate (CMR). The episodes of contraction in policystance were followed by upward movement in CMR.


Screenshot: 1.1 MPI and Call Money Rate

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MPI (left axis)CMR (right axis)

Note: In all screenshots months are shown in x-axis for each year beginningfrom 2000 to 2015. All the screenshots have been derived by authors from thesoftware Eviews.

Monetary Policy Stance and InflationThe screenshot 1.2 displays the comparative movement of monetary policystance (MPI) and monthly inflation. We can see the stance of monetary policyas a quantitative measure of whether policy is too tight, neutral or too looserelative to inflation. If the stance is too tight (loose), inflation will subsequentlydecrease (increase). The screenshot 1.2 provide some indications that periodsof upward and downward movement in inflation are followed by similarmovement with some lag in monetary policy index. Since, WPI inflation is y-o-y change in monthly WPI index, so the movement is not very clear relativeto MPI.



Screenshot: 1.2 MPI and WPI Inflation

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WPI inflation (% y-o-y) right axisMPI left axis

Monetary Policy Stance and Industrial GrowthThe screenshot 1.3 displays the movement of MPI and industrial growth,indicating some positive relationship. Following deceleration in IIP growth,the Reserve Bank resorted to monetary easing since April 2002, which facilitatedthe process of economic recovery and can be traced in the easing of MPI tillMarch 2004. That means high industrial growth is followed by loose policystance and vice versa.Screenshot: 1.3 MPI and IIP growth

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IIP growth (% y-o-y) right axisMPI left axis


Monetary Policy Stance and Money SupplyThe screenshot 1.4 shows the periods of tight policy stance associated withhigh money supply growth and vice versa. While the sharp growth in broadmoney since 2005 implied monetary easing, the movement of MPI suggesttighening of overall monetary conditions led by the contineous hike in policyinterest rates since October 2004.Screenshot: 1.4 MPI and money supply growth

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Money supply growth (% y-o-y) right axisMPI left axis

The comparison of our MPI results with earlier literature for overlappingperiods shows that our finding is consistent with others. For example,Samantaraya, (2009) also provides evidence of tight policy stance prior to2001-02 while accommodating policy stance during the period since 2001-02up to 2004-05.

ConclusionThis paper attempts to construct a monetary policy index to put togethermore than one indicator in order to have a better assessment of the stance ofmonetary policy. It is actually possible to commit a mistake to conclude whetherthere is a tightening (or easing) of policy just by tracking the movement ofone variable. In this context, based on monetary policy index (MPI), we haveassessed the monetary policy stance in the last sixteen years. Our findings



show that when WPI inflation tended to move upward due to easy monetarypolicy, the Reserve Bank started anti-inflationary stance through mild contractionin its policy during March 2011 to May 2011. Then again, the Reserve Bankhad to move towards mildly contractionary policy to defend rupee which wascoming under pressure against dollar during September 2013 to December2014 including February 2014. April 2007 and January 2014 are two monthswhen policy stance was neutral that is neither contractionary nor expansionary.During major periods between 2001 and 2007, GDP growth was 8 percent ormore, WPI inflation was around 5 percent or less. Money supply (M3) hasgrown at around 15 percent or more. During the year 2009, the policy stancewas expansionary due to crisis driven easy policy measures. This is consistentwith mildly and strongly expansionary monetary policy followed in these periods.

Notes1 D. Phil Scholar, Govind Ballabh Pant Social Science Institute, Jhusi, Allahabad,

University of Allahabad. This work forms part of my M.Phil thesis submitted in2017. Author is very grateful to Prof. U. Kalpagam and Prof. P. K. Chaubey foroffering useful comments and suggestions on earlier version of this paper.Email: [email protected]

2 This section provides the review of literature on monetary policy stance both foreignand Indian.

3 Author derived this measure of index from the interpretation of annual policy statementsof the Governor and mid-term /quarterly reviews.

4 This is referred to as the weighted average call money rate (WACMR), since it theaverage across the value which might have wide swings even in the course of anysingle trading day.

5 One important point need to be mentioned here is time sensitivity of sub-index. Ifwe use different time period; the maximum and minimum value may change andhence the value of MPI.

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Stance of Monetary Policy under Uncertainty. RBI WPS (DEPR): 05/2015, 1-29.Bernanke, B.S., & Blinder, A.S. (1992). The Federal Funds Rate and the Channels of

Monetary Transmission . The American Economic Review, 82(4), 901-921.Bernanke, B.S., & Mihov, I. (1998). Measuring Monetary Policy. The Quarterly Journal of

Economics, Vol.113, No. 3., 869-902.Bhattacharya, I. & Ray, P. (2007). How Do We Assess Monetary Policy Stance ? Economic

and Political Weekly, Vol No , 1201-1210.Estrella, A., & Mishkin, F.S. (1997). The Predictive power of the Term Structure of interest

rates in Europe and the United States: Implications for the European Central Bank.European Economic Review (41), 1375-1401.


Friedman, B.M., & Kuttner, K.N. (1992). Money, Income, Prices and Interest rates. TheAmerican Economic Review, Vol. 82, No. 3, 472-492.

Goodfriend, M. (1998). Using the Term Structure of Interest Rates for Monetary Policy .Federal Reserve Bank of Richmond Economic Quarterly. Volume, 84/3 summer.

Jadhav, N. (2006). Monetary Policy , Financial Stability and Central Banking in India.New Delhi: Macmillan.

Rangarajan, C. (2011). Contours of Central Banking. The Indian Economic Journal, Volume59(10, 69-73.

RBI. (1934). Reserve Bank of India Act. 1-100.RBI. (1985). Report of the Committee to Review the Working of the Monetary System, Chairman:

S. Chkravarty. Mumbai: RBI.RBI. (2011). Report of the Working Group on Operating Procedure of Monetary policy,

Chairman: Deepak Mohanty . Mumbai: RBi.RBI. (2014). Repor of the Expert Committee to Revise and Strenthen the Monetary Policy

Framework, Chairman: Urjit R. Patel . Mumbai: RBI.RBI. (2014-15). Handbook of Statistics on the Indian Economy. Mumbai: Reserve Bank of

India.Samantaraya, A. (2009). An Index to Assess the Stance of Monetary Policy in India in the

Post-Reform Period. Econmic and Political Weekly, Vol XLIV No 20, 46-50.Vasudevan, A. (2002). Evolving Monetary Policy in India: Some Perspectives. Economic

and Political Weekly, 1055-1061.



Appendix Table: Monetary Policy Index for India2000M01 0.36 2003M05 0.83 2006M09 0.52 2010M01 0.76 2013M05 0.02

2000M02 0.29 2003M06 0.84 2006M10 0.52 2010M02 0.72 2013M06 0.32

2000M03 0.18 2003M07 0.84 2006M11 0.55 2010M03 0.68 2013M07 0.40

2000M04 0.23 2003M08 0.86 2006M12 0.29 2010M04 0.65 2013M08 0.40

2000M05 0.06 2003M09 0.86 2007M01 0.50 2010M05 0.63 2013M09 0.41

2000M06 0.36 2003M10 0.86 2007M02 0.57 2010M06 0.63 2013M10 0.42

2000M07 0.14 2003M11 0.86 2007M03 0.63 2010M07 0.57 2013M11 0.38

2000M08 0.18 2003M12 0.86 2007M04 0.76 2010M08 0.56 2013M12 0.41

2000M09 0.24 2004M01 0.86 2007M05 0.58 2010M09 0.57 2014M01 0.39

2000M10 0.27 2004M02 0.85 2007M06 0.58 2010M10 0.68 2014M02 0.43

2000M11 0.35 2004M03 0.83 2007M07 0.56 2010M11 0.55 2014M03 0.42

2000M12 0.34 2004M04 0.81 2007M08 0.53 2010M12 0.54 2014M04 0.43

2001M01 0.40 2004M05 0.81 2007M09 0.54 2011M01 0.53 2014M05 0.43

2001M02 0.42 2004M06 0.79 2007M10 0.58 2011M02 0.48 2014M06 0.44

2001M03 0.46 2004M07 0.75 2007M11 0.56 2011M03 0.48 2014M07 0.45

2001M04 0.48 2004M08 0.70 2007M12 0.56 2011M04 0.45 2014M08 0.47

2001M05 0.49 2004M09 0.73 2008M01 0.57 2011M05 0.45 2014M09 0.47

2001M06 0.49 2004M10 0.75 2008M02 0.53 2011M06 0.44 2014M10 0.50

2001M07 0.52 2004M11 0.76 2008M03 0.42 2011M07 0.41 2014M11 0.49

2001M08 0.58 2004M12 0.75 2008M04 0.34 2011M08 0.40 2014M12 0.51

2001M09 0.54 2005M01 0.72 2008M05 0.38 2011M09 0.40 2015M01 0.51

2001M10 0.60 2005M02 0.72 2008M06 0.36 2011M10 0.42 2015M02 0.52

2001M11 0.62 2005M03 0.72 2008M07 0.48 2011M11 0.41 2015M03 0.53

2001M12 0.63 2005M04 0.72 2008M08 0.59 2011M12 0.39 2015M04 0.55

2002M01 0.63 2005M05 0.72 2008M09 0.79 2012M01 0.42 2015M05 0.53

2002M02 0.60 2005M06 0.71 2008M10 0.81 2012M02 0.44 2015M06 0.57

2002M03 0.63 2005M07 0.70 2008M11 0.79 2012M03 0.46 2015M07 0.56

2002M04 0.66 2005M08 0.68 2008M12 0.76 2012M04 0.46 2015M08 0.55

2002M05 0.68 2005M09 0.66 2009M01 0.88 2012M05 0.46 2015M09 0.55

2002M06 0.67 2005M10 0.61 2009M02 0.85 2012M06 0.48 2015M10 0.58

2002M07 0.69 2005M11 0.60 2009M03 0.84 2012M07 0.47 2015M11 0.57

2002M08 0.74 2005M12 0.62 2009M04 0.84 2012M08 0.47 2015M12 0.59

2002M09 0.74 2006M01 0.68 2009M05 0.81 2012M09 0.47

2002M10 0.72 2006M02 0.66 2009M06 0.81 2012M10 0.49

2002M11 0.73 2006M03 0.60 2009M07 0.80 2012M11 0.48

2002M12 0.72 2006M04 0.59 2009M08 0.81 2012M12 0.49

2003M01 0.80 2006M05 0.61 2009M09 0.78 2013M01 0.53

2003M02 0.80 2006M06 0.60 2009M10 0.79 2013M02 0.55

2003M03 0.80 2006M07 0.60 2009M11 0.76 2013M03 0.55

2003M04 0.81 2006M08 0.62 2009M12 0.76 2013M04 0.19


Microfinance Institutions in ContemporaryEconomic Scenario: A Study of Women

Empowerment through SHGs with SpecialReference to Uttar Pradesh

Garima Singh* & Anamika Choudhary**

“If we can come up with a system which allows everybody access to creditwhile ensuring excellent repayment – I can give you a guarantee that povertywill not last long.”

–Prof. Dr. Muhammad Yunus1

ABSTRACT

Microfinance is a trickle-up approach which is not just a financing system buta tool for social change. The MFIs have effectively enabled extremelyunderprivileged people, especially women to engage in self-employment projectsand generate income, empowering them in achieving poverty alleviation throughSelf Help Groups (SHGs).This paper deals with the empowerment of women and highlights the impact ofMFIs’ activities in civilizing the socio-economic status of their women clients incontemporary economic scenario. The study is divided into three sections - SectionI including a brief introduction and legal provision related to Microfinance industry.Section II focuses on the MFIs working in Uttar Pradesh and their role in groupformation, employment and income generation for the poorest among the poor.Section III involves the empirical examination of the changes in the economicstatus of the women clients held by the MFIs. In this study, the model used isSHG as per the specification of NABARD and it is based on only secondary data.Key Words: Microfinance, NABARD, Self Help Groups (SHGs), Empowerment,MFIs

* Research Scholar, Department of Economics, DSMNRU, Lucknow, U.P.** Associate Professor, Department of Economics, DSMNRU, Lucknow, U.P.

ARTICLE 6



SECTION I

IntroductionThe most famous saying said by the Pandit Jawaharlal Nehru is “To awakenthe people, it is the women who must be awakened. Once she is on themove, the family moves, the village moves, the nation moves”.Women despite of their indispensable and multidimensional contribution tothe society throughout the ages, struggle with a variety of deprivations thatmake them vulnerable differently and at different levels.2 In case of India,need of women empowerment arises as women are fundamentally equal, yetthey are not treated as equal in real life. Empowerment of women is definedas the process in which women are economically sufficed in order to confrontthe existing cultural, social barriers and effectively improve their well-being.

Micro FinanceMalegam Committee (2011) defined Micro Finance as ‘an economic developmenttool whose objective is to assist the poor to work with their way out of poverty.It covers a range of services which include, in addition to the provision ofcredit, many other services such as savings, insurance, money transfers,counseling, etc.3

Microfinance was started first, in Bangladesh by Md Yunus (The Nobel PrizeWinner, 2006) and largely provided by specialized “microfinance institutions”or MFIs in India. A microfinance institution (MFI) is any institution whichoffers microfinance services to poor, under-served or financially excluded persons.In India, microfinance institutions are registered as Non-Banking FinancialCompanies (NBFC-MFIs), Section 25 (Not-for-profit) Companies, Trusts, Societiesand Cooperatives.4

According to the Microfinance in India, State of the Sector Report, 20105,lending to women was thought of as a better means of supporting the entirehousehold. Hence, the Microfinance Institutions (MFIs) prioritized womenSHGs and trained these women to economically uplift, nurture the innerstrength, creativity and self-esteem with a view to advance the gendersensitivities in several socio-political contexts and also provide women a clearvoice in the family, the neighborhood and in the local community. MFIs engagedin forming joint liability groups (JLGs) of women clients to the exclusion ofmen. With more than 25 million clients across the country currently, MFIsreport that 93 per cent of their clients are women. Of the more than 4 millionSHGs in existence, about 85 per cent are reported to be exclusively of women.It can be seen from the table below where a trend analysis of women borrowers,SC/ST borrowers and minority borrowers is shown in numbers:

67Realizing Ambedkar's Vision without Reservation...Table 1: Composition of Borrowers – Category wise

Source: The Bharat Microfinance Report2016. Retrieved from: http://www.sa-dhanwp.n1.iworklab.com/wp-content/uploads/2017/11/The-Bharat-Microfinance-Report-2016.pdf

From the Table 1 above, it is observed that nine out of ten borrowers arewomen. The number of women borrowers, SC/ST borrowers and Minorityborrowers has been consistently increasing for last five years.

SHG-Bank Linkage Programme(Rajan, 2006)6 defined SHG as a group of 10-20 persons from homogenousclass who come together for addressing the common problem. They collectvoluntary savings on regular basis and utilize the pooled resources to makesmall interest bearing loans to their members. In India, microfinance cameformally in February 1992, after the launching of pilot phase of the SHG-Bank Linkage Programme (SHG-BLP) for promoting 500 SHGs which emergedas the world’s biggest microfinance programme in terms of outreach, covering7.7 million groups as on March 2015. These SHGs are mainly formed andmanaged by women and with this base well established, women are now ableto go out into the world, ready to handle any obstacle with confidence, skillsand grace. They move toward to the forefront, where they become drivingforce of positive financial and social change for themselves, their families,other women and their community.

Microfinance Institutions in Contemporary Economic Scenario:...


Graph 1: Historical Trend in Credit Linkage and Bank Loan Disbursed

Source: The Bharat Microfinance Report2016. Retrieved from: http://www.sa-dhanwp.n1.iworklab.com/wp-content/uploads/2017/11/The-Bharat-Microfinance-Report-2016.pdf

Trend of SHGs linked to banks has remained positive since the beginningthough the credit linked SHGs have witnessed a decline during the year2010-11 and 2011-12 as a ramification of the AP crisis. The credit linkage tobanks resumed a positive trend after year 2012-13 and continued in 2015-16.

Literature ReviewThe impact of micro-finance programme through SHG’s has been efficient inmaking optimistic social change to all members, irrespective of the directborrowers of the micro-credit (Planning Commission Report, 2001)7. Thestudy also mentioned the role of SHGs in the rural context; the promotion ofincome generation activities through MFIs for the poor rural women is perceivedas a powerful medium to resolve several socio-economic problems such aspoverty alleviation, provision of goods and services suitable to local needs,redistribution of income and opportunities in the society etc. In a study donein eastern UP in order to assess the role of SHG Bank linkage programmedepicted the substantial increase income and savings of rural women andmore loans for business were demanded after joining SHGs. It also mentionedthe actual picture of SBLP at the field level as the number of women participatingin the SHGs is very small and in many area women are not aware about the


microfinance. (Ramesh & Rao, 2014)8 Micro-finance interventions throughSHGs programmes are well-recognized world over as an effective tool forpoverty alleviation and improving socioeconomic status of rural poor in Indiatoo, micro-finance is making headway in its effort for reducing poverty andempowering rural women. And micro-finance through the network of cooperatives,commercial banks, regional rural banks, NABARD and NGO’s has been largelya supply driven recent approach. (Mallikarjuna, 2016)9. The SHGs haveimproved the standard of living of women as participants, decision makersand beneficiaries in the democratic, economic and socio-cultural life. But thereis need for deepening/new product/different model for micro finance as theexisting level has not helped them sufficiently to come out of poverty. (Singh& Mathur, 2011)10.Given that a majority of microfinance programmes target women with thesupreme goal of empowering them, this paper examine the impact of microfinance,in particular the Self Help Groups (SHGs), on women’s empowerment afterthe microfinance crisis. Moreover, various studies have been conducted so farwhich reveals that overall SHGs data have been used to infer about theempowerment of women. Exclusive data for women participation in SHGshave rarely been used. Therefore, it becomes necessary to use such data whilemaking a study on women empowerment. To fill this lacuna, the presentresearch paper studies the contemporary economic scenario of MFIs focusingon empowerment of women through SHGs linkage programme in Uttar Pradesh.

Legal ProvisionsThe micro finance sector serves vulnerable sections of society, lacking bargainingpower with low financial literacy and living in a social environment in whichthey can be easily exploited. Therefore, any legislation intended to provide,promote and regulate micro finance should contain string of safeguards againstthis vulnerability (Standing Committee on Finance, 2014).‘The International Year of Microcredit 2005’, brought several policy changesand coordinated efforts to ensure financial inclusion to all. In order to regulatethe sector, the various legal provisions related to microfinance sector arementioned below in the table 2.The passage of the proposed MFI bill should bring clarity on working andmany issues related to microfinance sector. So now, all eyes are on the newmicrofinance bill to guard the interests of the clients and to offer healthierregulatory environment for the operations of MFIs in India.



Table 2: Legal provisions related to Microfinance sector

YEAR LEGAL PROVISION OBJECTIVE

January, 2006

RBI releases Guidelines for Use of Business Facilitators and Correspondents for Financial Inclusion

To enable banks to use the services of Non-Governmental Organisations/ Self Help Groups (NGOs/ SHGs), Micro Finance Institutions (MFIs) and other Civil Society Organisations (CSOs) as intermediaries in providing financial and banking services.11

March, 2007 Micro Financial Sector (Development and Regulation) Bill, 2007 introduced in Lok Sabha

To provide regulatory framework to MFIs and selected NABARD as the regulator. This Bill lapsed with the dissolution of the Lok Sabha.

October, 2010 Malegam Committee setup by RBI after Andra Pradesh crisis

To address the issues like noticeable high interest rate, multiple borrowings, evident coercive recovery practices of MFIs.

December, 2011

RBI introduces separate category of NBFCs (NBFC – MFIs)

To satisfy certain conditions regarding the capital to be employed, lending to members, cap on interest to be charged and margin to be retained, etc.

May, 2012 The Micro Finance Institutions (Development and Regulation) Bill, 2012 introduced in the Lok Sabha

To provide a statutory framework for the Micro Finance Institutions (MFIs) facilitating financial inclusion and confer regulatory power to RBI. The Bill was rejected by Parliamentary Standing Committee on finance.

August, 2012 RBI to be the sole regulator for the microfinance industry

To specify margin and annual percentage rate to be charged by any MFI, fair and reasonable methods of recovery of loan advanced by the MFIs; and inspection of the accounts of the MFIs and take necessary action.

November, 2014

RBI releases Guidelines for Licensing of Payments Banks

To further financial inclusion by providing (i) small savings accounts and (ii) payments/remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users. 12

June 2014 and

March 2015

Self-regulatory Organisation (SRO) status to Microfinance Institutions Network (MFIN) and Sa-Dhan

To formulate a code of conduct for member MFIs and ensure compliance, have an effective grievance redressal system meant for borrowers and a dispute resolution arrangement for members.

April, 2015 Micro Units Development & Refinance Agency Limited (MUDRA)Yojana

To develop the micro enterprise sector in the country by extending various support including financial support in the form of refinance, so as to achieve the goal of “funding the unfunded”.

July, 2016 Micro Finance Institutions (Regulation of Money Lending) Bill, 2016

To ‘protect the women Self Help Groups from exploitation by the Micro Finance Institutions in the country and for matters connected therewith or incidental thereto. 13


SECTION II

Objectives of Study• To examine the impact of MFIs through SHGs on socio-economic conditions

of their women clients with special reference to Uttar Pradesh.• To offer suggestions for the improved services of MFIs working for women

empowerment.

Significance of the Study:The present study highlights the role of SHGs in microfinance sector and itsimpact on their clients especially the women folk in its effort to alleviatepoverty. Hence, the study will be relevant to the Government, MFIs, MFIs’clients, NGOs, donors and future researchers on the area under discussion. Itwill give a reservoir of literature for future improvement and development ofthe subject matter.

MethodologyThe present study adopts the ex-post facto research design and is empiricalin nature. It is based on secondary data assembled from published anddocumented sources of government, microfinance institutions and authorizedagencies reviewing the performance of microfinance sector.For this study, the women empowerment data of Uttar Pradesh were sourcedfrom National Family Health Survey (NFHS) which is a large-scale, multi-round survey conducted on a representative sample of households throughoutIndia. The parameters used to judge women empowerment include literacyrates, use of hygiene methods, employment, ownership of financial resourcesand decision making. To assess the impact of microfinance through SHGs onwomen’s empowerment, other data were sourced from reports published byRBI, NABARD, NRLM, MFIN and SA-DHAN. For analysis of the findings,percentage calculation and graphical presentation were used for betterunderstanding.

The Broader ContextUttar Pradesh is densely populated region and one of the poorest in India interms of density and depth of poverty. The total population of U.P. is 1,99,812,341including 95,331,831 of females. The State has high diversity in cultural andeconomic context, high demographic diversity, and lags behind other Statesin terms of literacy, empowerment and financial inclusion, particularly women.This gives a huge potential for micro finance operations in the State.14



Women Empowerment Scenario in Uttar PradeshThe general factsheet of women empowerment in Uttar Pradesh obtained fromNational Family Health Survey 2015-16 (NFHS-4) has been depicted below:

Table 3: Women’s Empowerment (age 15-49 year) Factsheet in Uttar Pradesh:SR NO. PARAMETERS 2005-06 2015-16

1. Women who are literate (%) 44.9 61.0

2. Women with 10 or more years of schooling (%) 18.3 32.9

3. Currently married women who usually participate in household decisions (%) 75.9 81.7

4. Women who worked in the last 12 months who were paid in cash (%) 16.0 16.6

5. Ever-married women who have ever experienced spousal violence (%) 42.3 36.7

6. Ever-married women who have experienced violence during any pregnancy (%) na 4.3

7. Women owning a house and/or land (alone or jointly with others) (%) na 34.2

8. Women having a bank or savings account that they themselves use (%) 13.2 54.6

9. Women having a mobile phone that they themselves use (%) na 37.1

10. Women age 15-24 years who use hygienic methods of protection during their

menstrual period*(%) na 47.1

Source: National Family Health Survey (NFHS-4) India 2015-16. Retrieved from: http://

rchiips.org/nfhs/pdf/NFHS4/UP_FactSheet.pdf

As per the above table and the NFHS report15, there is the increment of 21%in women literacy rate between 2005-06 to 2015-16 and 32.9% of women have10 or more years of formal schooling in the year 2015-16, which show anappreciable empowerment of women in Uttar Pradesh. Overall, 81.7 percent ofcurrently married women participate in making decisions about their own healthcare, major household purchases, and visits to their own family or relatives.Participation in all three decisions varies most by age, increasing sharply from38 percent among women age 15-19 to 69 percent among women age 40-49.The proportion of women with money which they control is highest amongwomen age 40-49 (52%), women with 12 or more years of schooling (52%) andwomen who are employed for cash (58%) than any other group of women, 54.6percent of women have a bank or savings account that they themselves use.Around thirty-four percent of women age 15-49 own a house alone or jointlywith someone else, and 26 percent of women and 50 percent of men own landalone or jointly with someone else. A little less than two-fifths (37%) of womenhave a mobile phone that they themselves use, and among women who havea mobile phone that they themselves use, 60 percent can read SMS messages.According to the survey done by NHFS, only 25 percent of all women age15-49 were employed in the 12 months preceding the survey; in the sameperiod. Among employed women, 16.6 percent earned cash. Using a hygienic


method of menstrual protection is important for women’s health and personalhygiene. In Uttar Pradesh, overall, 47 percent of women age 15-24 use ahygienic method of menstrual protection. Women with at least 12 years ofschooling are more than three times as likely to be using a hygienic methodas women with no schooling.

Progress under Microfinance via SHGs in Uttar PradeshMany SHGs in Uttar Pradesh have been linked with banks to ensure creditsupply through MFIs. There are 25 MFIs operating in the state (includingthose having Head Quarters outside) in 71 districts with 1291 branches as onMarch 31st, 2016. The outreach to the clients of these MFIs were 39 lakh withthe loan disbursement of `7791 crore holding 3rd position in terms of loandisbursement through MFIs in India.Coming to the other aspect, it is observed that saving first and credit next isassumed to be the basic philosophy of the SHG-Bank linkage programme. So inthe table 5, Savings of SHGs with Different Banks in Uttar Pradesh are mentioned:

Table 5: Progress under Microfinance – Savings of SHGs with Different Banks inUttar Pradesh (Amount ` lakh)

Name of the Bank

Year Total SHGs Saving linked with Banks

Out of Total - Exclusive Women SHGs

No. of SHGs

No. of Member

Savings -Amount

No. of SHGs

In% No. of Members

In % Savings-Amount

In %

Public Commercial

Banks

March, 2010

189374 2055118 16666.25 105667 55.80 1134702 55.21 6969.07 41.82

March, 2016

112017 1251165 24760.42 54386 48.55 610584 48.80 10295.9 41.58

Private Commercial

Banks

March, 2010

NA NA NA NA 0 NA 0 NA 0

March, 2016

17155 224119 1172.97 17155 100 224119 100 1172.97 100

Regional Rural Banks

March, 2010

237942 NA 9567.55 NA 0 NA 0 NA 0

March, 2016

233625 2532369 12230.09 137296 58.77 1481082 58.49 6978.68 57.06

Cooperative Banks

March, 2010

2444 1377 230.23 25 1.02 211 15.32 0.86 0.37

March, 2016

1182 13183 42.81 731 61.84 8267 62.71 26.78 62.56

Total March, 2010

429760 2056495 26464.03 105692 24.59 1134913 55.19 6969.93 26.34

March, 2016

363979 1488467 38206.29 209568 57.58 2324052 64.05 18474.33 48.35

Source: Compiled by the researcher from various ‘Status of Microfinance in India’ Reports(NABARD, 2010, 2016). Retrieved from: http://www.nabard.org/auth/writereaddata/tender/3107173739SMFI%202009-10%20Eng.pdf, http://www.nabard.org/auth/writereaddata/File/Status%20of%20Microfinance%20in%20India%20-%202015-16.pdf



From the above table 5, the increasing trend of savings with bank of totalSHGs as well as women participation in SHGs can be observed. The numberof SHGs with banks increased from 24.59% in 2010 to 57.58% in 2016, numberof women member increased from 55.19% in 2010 to 64.05% in 2016 andsavings amount of women SHGs with banks increased almost double in sixyears to 48.35% in 2016. The role of Public Commercial bank slightly declinedas the number of women SHGs linked with them declined about 7.25% in sixyears. The table highlights the engagement of Private Commercial banks,RRBs and Cooperative banks in women empowerment as the participation ofthese with women SHGs were close to zero in 2010 reaching to 100% participationof women as their SHG clients in Private Commercial banks, 58.77 % in RRBand 61.84% in Cooperative banks.In the table 6, Loan Disbursements of SHGs by Different Banks in UttarPradesh are mentioned:

Table 6: Progress under Microfinance – Bank loans disbursed Different Banks toSHGs in Uttar Pradesh (Amount ` lakh)

Name of the

Bank

Year Total Loans disbursed during the year

Out of Total –Loan Disbursed Exclusive to Women SHGs

No. of SHGs Loan Disbursed No. of SHGs In % Loan Disbursed

In %

Public

Commercial

Banks

2009-10 16906 18649.40 8383 49.59 7559.55 40.53

2015-16 11326 6650.65 6463 57.06 3746.69 56.33

Private

Commercial

Banks

2009-10 NA NA NA 0 NA 0

2015-16 6847 17284.68 6847 100 17284.68 100

Regional Rural

Banks 2009-10 23930 22274.73 NA 0 NA 0

2015-16 7692 5500.17 6357 82.64 4767.96 86.69

Cooperative

Banks 2009-10 1800 1492.05 4 0.22 3.05 0.20

2015-16 43 4.79 43 100 4.79 100

Total 2009-10 42636 42416.18 8387 19.67 7562.60 17.83

2015-16 68366 29440.29 19710 28.83 25804.12 87.65

Source: Compiled by the researcher from various ‘Status of Microfinance in India’ Reports

(NABARD, 2010, 2016). Retrieved from: http://www.nabard.org/auth/writereaddata/tender/3107173739SMFI%202009-10%20Eng.pdf, http://www.nabard.org/auth/writereaddata/File/Status%20of%20Microfinance%20in%20India%20-%202015-16.pdf


From the table 6, it can be observed that total women SHGs to which loanwere disbursed increased from 19.67% in 2010 to 28.83% in 2016. The totalloan amount disbursed to the women SHGs increased from 17.83% in 2010 to87.65% in 2016. The table highlights the loan disbursement of PrivateCommercial banks, RRBs and Cooperative banks to women SHGs as it wereclose to zero in 2010 reaching to 100% of loan disbursed to women as theirSHG clients in Private Commercial banks, 86.69% in RRB and 100% inCooperative banks.The Rural Development Department of Uttar Pradesh is also currently engagedSHGs bank linkage programme under National Rural Livelihood Mission.The aim of showing the below table is to highlight the penetration of SHGsin various social categories in U.P. Table 4 shows the details of SHGs supportedunder NRLM in UP. :

Table 4: Women SHGs under NRLM in Uttar Pradesh as on March, 2016

1. SHGs Social Category

SC SHG ST SHG Minority SHG Others SHG PWD Total No. of SHGs

65806 2412 10,893 1,03,954 14916 197,981

2. SHGs Profile Entry Status

Districts Count Blocks Count SHGs Count

Total Districts

No. of Districts where SHGs has

started

Total Blocks

No. of Blocks where SHGs has

started

Total SHGs SHGs with less than 10 Members

75 75 821 818 1,87,323 13,895

Source: Compiled by the researcher from National Rural Livelihood Mission website. Retrievedfrom: http://nrlm.gov.in/outerReportAction.do?methodName=showReportMaster

From the table no.6, the overall categorization of women SHGs under NRLMcan be observed. It gives us the proof of women empowerment through SHGsas they economically uplift women including a huge number of SC, ST, Minorityand PWD women clients mostly from the rural niche. All the districts of U.P.have also been covered under the NRLM programme including 818 blocks.

Summary of FindingsIn this study, the inferences have been drawn based on secondary data mentionedin Section II. To highlight the role of Microfinance through SHG-Bank linkageprogramme in the women empowerment in Uttar Pradesh, graphical analysishas been done for much better understanding.



Graph No. 2: Social Category of Women Participation in SHG Bank linkageprogramme

To support the above mentioned findings, Graph no. 2 shows the MFIs outreachto various categories of disadvantaged women section in society. It can beseen that maximum participation of women are from other category i.e., 52.51andSC category i.e., 33.34. The MFIs via SHGs in U.P. have played a major rolein women empowerment but still they need to widen their attention towardsMinority ant ST category of the poorest section and regions.

Graph No. 3: Year-wise Comparison of Exclusive Women SHGs Savings with Bank


In Graph no 3, Year-wise Comparison of Women SHG Savings with differentbank has been done. It shows that there is an increment in number of womenSHGs by 32.99 % as well as the women members in all SHGs by 08.86%during 2010-16. In 2016, 64-05% of total SHG members were women clientsand their savings with banks increased up to 48.35% of total savings whichshow a positive sign of MFIs role in uplifting women and making themeconomically independent.Graph no. 4 below shows year-wise comparison of loan disbursement by differentbanks exclusive to women SHGs so as to judge the progress under microfinance.The main highlights of the graph are the lending done by Private Commercialbanks, RRBs and Cooperative banks to women SHGs as there were zerowomen clients in 2010 which increased to 100%, 86.69% and 100% womenclients in 2016. In total, the loan disbursement only to women clients increasedby 70.62% during 2010-16.

Graph No. 4: Year-wise Comparison of Loan Disbursement by Different Banks toWomen SHGs

One more thing note from the above analysis, that the increment in loandisbursement is much higher than the increment in number of women clients.It shows that there is huge demand by women clients for the financial servicesprovided by the MFIs, therey showing a definite economic impact on householdsin terms of control, management ability, self-confidence, change in behaviourand decision-making with increase in income and decline in vulnerability



ConclusionTo conclude, the MFIs have effectively enabled extremely underprivilegedpeople, especially women to engage in self-employment projects and generateincome, empowering them in achieving poverty alleviation through Self HelpGroups (SHGs). The SBLP is going through a motivating phase at themoment. The savings and credit linkage activity is picking up after aperiod of stagnation and negative growth, NRLM is emerging as the mainplayer in the field of microfinance, digitization of SHG records has startedand evaluation of SBLP impact on women members shows powerful impacton women empowerment.Major strides have been made by the SHG bank linkage programme in thedirection of women’s empowerment, but for microfinance to show greater impact,it needs to be complemented by microfinance ‘plus’ or other non-financialservices. These can empower women to effectively improve their positionswithin the family, neighborhood and society, and not just make them moreefficient in their roles defined within the existing norms.

Suggestions• Production, processing, packaging, marketing model and strengthening

of the qualities of an entrepreneur needs to be in place for the sustenanceof SHGs. Arranging more trades and fairs throughout the year or somepermanent avenues for selling out the rural products can give a solutionto them.

• The important suggestions for improvement are the development of skilloriented training programmes, workshops, encouragement of good leadershipin the group and constant guidance and support through the CommercialBanks, government and non government agencies is needed that leadsfinally to inclusive growth.

• It also suggested that the MFIs can earn sufficient profit & can satisfytheir clients, only if they are able to generate funds at lower rates ofinterest and can also introduce some other insurance & health financialproducts to increase their operating profit. They should also practice theKnowledge Management Centre in their organization.

• More active cooperation on the part of District Rural DevelopmentAuthorities(DRDAs), Blocks and Panchayats are also recommended foractive supervision, nurturing, removing weakness, meeting timelymicrocredit and group requirements, ensures efficient functioning of theSelf Help Groups and Women empowerment as well.


References1. Founder, Grameen Bank in Bangladesh. Retrieved from: http://ceriscope.sciences-

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4. IFMR Investments. (2014). Microfinance in India - Sector Overview – FY endedMarch 2014. Chennai, India. Retrieved from: https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwig2 PTCp-vXAhWDsI8KHQAPBIEQFggoMAA& url=https%3A%2F%2 Fwww.researchgate.net%2 Ffile.Post FileLoader.html%3Fid%3 D56beb5766307d995a28b4567%26assetKey%3DAS% 253A328529188278272%25401455338870108&usg=AOvVaw0JnRAbbacRgCzkA0L22yRf

5. Sage Publications India Pvt Ltd. (2011). Microfinance India - State Sector Report.New Delhi, India: N. Srinivasan. Retrieved from: http://indiamicrofinance.com/wp-content/uploads/2012/09/microfinance-india-state-of-sector-report-2011.pdf

6. Rajan, R. (2006). Towards a Sustainable Microfinance Outreach in India Experiencesand Perspectives. Retrieved from: https://www.microfinancegateway.org/library/towards-sustainable-microfinance-outreach-india-%E2%80%93-experiences-and-perspectives

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9. Mallikarjuna, T. (2016). SHG Bank Linkage Programme as a Vaccine for WomenEmpowerment: A Sociological Review In Chittoor District. International Journal ofAdvanced Research in Management and Social Sciences, 406-418. http://www.garph.co.uk/IJARMSS/Mar2016/25.pdf

10. Singh, S.K., & Mathur, H.P. (2011). Summary Proceedings of Conference on InclusiveGrowth & Micro Finance Access (CIGMA e-Proceeding). Varanasi, India. Retrievedfrom: http://www.bhu.ac.in/fms/CIGMA-2011Report.pdf

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Do Fiscal Sustainability Measures AugmentGrowth Process in India?

Swati Jain*

ABSTRACT

The paper highlights that in the case of India, as the fiscal consolidationprocess is progressing, government expenditures are forcefully reduced whiletax revenues are responding slowly and therefore not help pushing the GDPgrowth. Capital expenditures are less than subsidies and interest paymentsand thereby supply side is constrained, which is of crucial import from thelong-term point of view. Higher capital expenditures, financed through higherdeficits directed towards basic infrastructure related to agriculture and industrywill support the supply side bottlenecks for the economy. On the basis of indicatoranalysis for fiscal sustainability, this research paper finds out Indian fiscalvariables to be fulfilling only weak sustainability conditions.Key Words: Capital expenditure, economic growth, fiscal sustainability, indicatoranalysis

IntroductionImplementation of Fiscal Responsibility Budget Management Act (FRBM),2005, and government’s shrinking fiscal space triggered policy discussion towardsfiscal sustainability and debt sustainability at large. Further, in the revisedFRBM framework, fiscal sustainability is considered decisive for price stabilityas well as growth in GDP and investment by the policy makers, foreigninvestors and corporate world. Though,it does not negate contribution of theconventional fiscal policy yet demands a critical balance between growth andstability. The approach in which Fiscal Sustainability is defined, i.e., compulsoryreduction in deficit and debt, leads to widespread compression of governmentexpenditures. In this process of compression,actual impact is on capital anddevelopment expenditures. On the contrary, these expenditures have to be

* Assistant Professor, Department of Economics, University of Allahabad, Allahabad,U.P. Email: [email protected]

ARTICLE 7



increased for higher GDP growth because reduction in deficit, debt and growthhas already limited the government’s capacity to finance the growth process.The objective of this research is to investigate the relationship between GDPgrowth, inflation and fiscal sustainability indicators for the Indian Economyduring the period from 2002-03 to 2016-17.The paper is divided into three sections. First section highlights the weakeningrelationship between growth and inflation rates, consequently leading to erosionin gross savings and gross investments ratios with a medium term perspective.Second section reviews the theoretical paradigms of fiscal policy and impactof fiscal deficits on economic growth. Third section discusses fiscal and debtsustainability measures during 2012-2017 for Indian economy with a presumptionof excessive policy focus on sustainability issue.

Growth and Fiscal Discipline: A Missed OpportunityIndian Economy has been observing shorter phases of acceleration and longerphases of slowdown in GDP growth along with majority of the macroeconomicindicators in the last 15 years. Figure 1 below, exhibits per capita incomegrowth at constant prices and economic growth measured through GDP atbasic price, generally rising before 2010-11, followed by deceleration sincethen. A clear trend of decline can be observed in the two since 2011-12.

Figure 1: Indian Economy Growth at current prices

4.06.08.0

10.012.014.016.018.020.0

GVA at Basic Price Per Capita NNP

Source: Compiled from Handbook of Statistics on Indian Economy, 2016-17, Reserve Bankof India accessed from https://dbie.rbi.org.in/DBIE.rbi.

There have been experts writing on the ayes and noes of the change in theaccounting methodology with a clear indication towards a midterm slowdownwith some quarters of rising growth but without persistence. According to the


data provided by the Ministry of Finance1, quarterly GDP growth at constantprices have risen from 5.5 percent in 2012-13 to 7.0 percent or above during2015-16 and 2016-17 but has again declined to 6.1 percent in the last quarterof 2016-17 and further to 5.7 percent in the first quarter of 2017-18.The slowdown in growth has been mainly attributed to slowdown in growthin manufacturing and those sectors which are investment intensive and affectemployment also. In comparison to the Finance Ministry GDP figures, ReserveBank of India quarterly statistics reveal actually slower growth in each quarter.Their projected figures for GDP as well as manufacturing again confirm thepersistence of slowdown due to low returns on investment.Figure 2 exhibits the savings and investment ratio in terms of GDP. Thereare three issues to be mentioned in this context. First is the persistence inthe declining trend between savings and investment. Second is the growinggap between savings and investment. Third is the widening gap betweengross and net values of both the variables particularly during 2009-10 to2014-15. As per the classical argument of Ragner Nurkse and RosensteinRodan, low savings rate will be pulling down the investment rate. This appearsto be the case of India’s growth since 2007-08.Government of India (GoI, 2018) attempted to empirically establish in theEconomic Survey2 that slowdown in investment ratio is a major cause ofconcern for slowdown in growth and measures are urgently required to reversethis declining trend while declining phase is yet to continue for a longer time.The Survey mentions, it is important to note, that this is perhaps not adeclining phase as these two ratios are back from its peak of 2007 to the 2003level (in 2007 Investment GDP ratio reached a peak of 35.6 percent withsavings GDP ratio at the level of 38.3 percent, indicating a net outflow ofsavings). Moreover, the decline in these ratios in percentage terms has beensmaller that the increase during 2004-05 to 2007-083 . On the basis of thecross-country investigations, it has been stated that responsiveness of investmentdecline towards GDP growth is significant and savings appear to be a nonsignificant factor.The facts which have been overlooked here are two. First, there has been asignificant shift in the domestic savings composition from financial savings tophysical savings which continuously affects the domestic funds available forallocation of investment in the country. The reason behind this shift, beingnegative real return on savings due to inflation and growth slowdown, hasserious implications for fiscal policy. Second, private sector investment hasdeclined by 5 percentage points and public investment has failed to play anysignificant role due to small contribution in the overall investment. Therefore,the paper argues for increase in capital expenditures by the Government.

Do Fiscal Sustainability Measures Augment Growth Process...


Figure 2 Indian Economy Savings and Investment Ratio as percent to GDP

15.018.021.024.027.030.033.036.039.0

GDS NDS GDCF NDCF

Source: compiled from Handbook of Statistics on Indian Economy, 2016-17,Reserve Bank of India accessed from https://dbie.rbi.org.in/DBIE.rbi.

Figure 3: Inflation rates in India

-7.0

-2.0

3.0

8.0

13.0

WPI all CPI iw GDP growth

Source: compiled from Handbook of Statistics on Indian Economy, 2016-17,Reserve Bank of India, accessed from https://dbie.rbi.org.in/DBIE.rbi.Figure 3 exhibits major inflation rates declining since 2011-12, growing gapbetween wholesale prices index based inflation rate and CPI for IndustrialWorkers. Although these two rates are directly incomparable but do indicatea significant fact that GDP slowdown has dampened both price indices resultingin production slowdown and the sharp downfall in wholesale prices appears


to be unrelated with the consumer price index as with GDP slowdown. Onemore vital attribute that can be seen here, is the weak negative correlationbetween inflation and GDP particularly since 2013-14.It is imperative to scrutinize here that lower inflation rates are a very recentphenomenon as 4-5 percent benchmark has not been achieved. Since 2013-14,overall inflation rates do not appear to be a major problem, but growth is notrising as expected. In this context, New Keynesian explanation of nominaland real rigidities and imperfect information effect of general price level onrelative prices appears to provide adequate explanation. According to thesepropositions, when aggregate inflation rates in India have declined sharply inthe last five years, relative prices, such as food, fuel, house rent and servicecosts have actually risen, thus leading to a slowdown in most of themacroeconomic variables such as savings, investment, tax revenues, exports,profits, agricultural and manufacturing output, consequently employment andmany others. Therefore, it is interesting to revisit the crowding in role ofexpansionary fiscal policy in the context of growth slowdown. Further, as theinflation rate will start rising in the coming quarters, as is clear from therecent RBI forecast (refer to Monetary Policy Report, April 2018), and thereforelikelihood of interest rate hike, GDP growth will again be affected. Besides,GDP growth will be affected by rising inflation because household expenditurealone has been the major factor for growth while private sector investmentand government expenditures are already moving in the downward direction.As it has been depicted in Table-1 (split into Part A and Part B) all the fiscalvariables have remained inconsistent in their behaviour. Post 2011-12, alongwith GDP slowdown there has been drastic reduction in the fiscal deficits andexpenditures. Argument for the fall in growth, the inflationary impact ofincrease in deficit and expenditure, does not appear to be true as inflationrates are also declining. Further investment rate as well as exports has alsoslowed down post 2011-12 due to cost and supply side bottlenecks. In thiscontext capital expenditures, through the budget, would have increased theGDP growth at least by correcting the expectations of the producing sectors.It is also important to observe from the quarterly reports of public debtmanagement published by the Ministry of Finance, Government of India, thatthere has been consistent over borrowing by the government against the fixedtarget, although this borrowing is being spent on current expenses which hasthe least possibility of generating future revenues for the government. Thereason behind low revenue generating capacity of government expenditures isthat targeted increase in non-tax revenue is still not the component of thefiscal sustainability indicators.



Table-1: Percentage Variation in Growth, Gross Domestic Capital Formation andFiscal Variables

Part (A) based on GDP at factor cost and GDCF figures at 2004-05 prices Year

GDP/GVA

Gross Fiscal Deficit

Gross Primary Deficit

Capital Expenditure

Total Expenditure

Tax Revenue

GDCF

2003-04 7.96 -15.026 -102.989 46.41 14.02 14.29 15.70 2004-05 7.05 2.045 39.877 3.85 5.74 15.99 29.77 2005-06 9.47 16.409 -1310.965 -41.44 1.502 13.43 16.25 2006-07 9.56 -2.637 -155.770 3.64 15.35 25.16 13.38 2007-08 9.32 -10.985 473.035 71.91 22.16 24.74 18.15 2008-09 6.72 165.532 -428.184 -23.75 24.03 -0.30 -5.22

2009-10 8.59 24.182 41.855 24.98 15.9 6.03 17.25 2010-11 8.91 -10.727 -32.047 38.98 16.87 37.65 14.08 2011-12 6.68 38.116 73.993 1.26 8.94 -4.70 3.94

Part (B) based on GVA at Basic price and GDCF at 2011-12 prices 2011-121 64.824* 38.116 73.993 1.26 8.94 -4.70 62.01* 2012-13 5.41 -5.000 -27.104 5.22 8.127 17.01 6.94 2013-14 6.05 2.584 -27.351 12.48 10.57 15.41 -5.25 2014-15 7.23 1.583 -15.803 4.80 6.684 8.54 8.50 2015-16 7.93 4.302 -15.837 28.65 7.64 8.50 7.55 2016-17 6.62 0.278 -43.812 10.60 12.49 19.12 7.20 2017-18# 6.4 11.058 16.578 -3.92 12.28 15.26 4.51

Source: Source: compiled from Handbook of Statistics on Indian Economy, 2016-17, ReserveBank of India and Monthly Economic Report, January 2018, Ministry of Finance,Government of India.

*GDP calculation was replaced with GVA at basic price with base year 2011-12.# advance estimates for GVA & GDCF while fiscal variables are revised estimates

Theoretical Paradigms of Fiscal Sustainability and GrowthRelationshipFiscal Policy, through its expansionary impact on aggregate demand, resultsin increase in national income in the traditional IS-LM framework. It alsoresults in resource mobilisation, capital formation, socio-economic infrastructureenhancement and balanced regional development in countries where privatesector or market mechanism has structural bottlenecks to operate. Thus, Indiawas a perfect case for active demand side stabilization policies. Monetarypolicy was prominently driven by fiscal dominance, i.e. supporting the deficit


financing programme and developing the banking system for adequate resourcemobilisation and State directed investment programmes. Since late 1980s asIndian economy no longer remained a closed economy and inefficiencies of thepublic sector accumulated at its highest levels, role of fiscal policy was questioned.Inflation and exchange rate management appeared to be a larger concern andtherefore, fiscal dominance has to be replaced by fiscal consolidation duringthe economic reforms of 1990s.Besides, over the years, supply side support or micro fiscal issues were ignoredand misplaced in the policy making. For instance, taxes; agricultural prices;subsidies; credit and land reforms are always dealt with very short termpolicy approach; tax and credit reforms related to manufacturing sector arestill distorting the growth of private sector and infrastructure projects delaysand bottleneck remains an unfinished agenda.Government deficits were being criticised for crowding out private investment;raising the interest rates and payment burden; deteriorating the quality ofpublic expenditure; external deficits; risk to investment potential; financialrepression and creating inflationary pressures even if there is unutilised capacity,unemployment and shortage of aggregate demand in the economies like India.Rakshit (2000); Lahiri& Kannan (2004); Pattnaik (2017); explain that it isnot the fiscal deficit per se leading to crowd out private savings and investmentratios but it is overall fiscal policy which appears to be providing incorrectsignals for the private sector and households’ behaviour. Fiscal deficit is essential,given a particular level of tax revenues in all times and government’s budgetconstraint. Two other macroeconomic agents viz., private sector and householdsalways struggle to coordinate. The paper explores here supply side aspect ofthe fiscal policy in India.It is important to note that there is no agreement among economists eitheron analytical grounds or on the basis of empirical results whether financinggovernment expenditure by incurring a fiscal deficit is good, bad, or neutralin terms of its real effects, particularly on investment and growth. Refer toBox-1. Since late 1970s we could observe a growing consensus among policymakers and academic circles for rule based polices, viz., deficit targeting;inflation targeting; FRBM and many others. On the basis of the argumentsproposed in the “Policy–Ineffectiveness Proposition”, where aggregate demandstabilization policies (both monetary and fiscal) do not affect the real variablesin the long run, rules for fiscal sustainability, monetary stability, and severalothers were advocated by the New Classical School5.



Box-1: Impact of Fiscal Deficits: Different theoretical Perspectives

Neo-Classical Ricardian Keynesian Supply-Side Consumers Life time horizon Infinite Myopic liquidity

constrained Indifferent as politicians will force the spending at higher levels

Deficit based tax cut

Private saving decline

Due to inter-generational distributions, no effect

Increases aggregate demand

Contraction in government spending

employment Full employment Full employment Less than full employment

Less than full employment

Interest rate increases No effect increases increases Inflation In creasesevery

time when debt is monetized

Increases only if output gap increases

Not significant as unutilized capacity exist

Will not increase if productivity rises and income redistribution takes place

Contention Fiscal deficits detrimental

Fiscal deficits irrelevant

Fiscal deficit beneficial Fiscal deficit neutral

Source: adapted from Rangrajan & Srivastava (2005)

According to the IMF (2003), a country’s fiscal policy can be termed sustainableif “(i) the current revenue and expenditure pattern does not require largefuture correction; in revenue and expenditure or without resorting to debtdefault or excessive debt monetization and (ii) normal external shocks do notresult in debt distress”. In other words, fiscal sustainability deals with thefuture implications of the current fiscal stance. According to Blanchard,Chouraqui, Hagermann and Sartor (1990), a sustainable fiscal policy is onein which current tax and expenditure programmes can be maintained withoutresulting in a persistent increase in public debt. Such a policy ensures thatthe debt-to-GDP ratio eventually converges to its initial level. If the Governmentbudget is financed without excessive accumulation in debt or money supply,it will lead to fiscal sustainability (Adams, et.al:2010). More importantly,with a long term perspective, static and dynamic sustainability has also beenexplained and emphasized upon by the researchers. Static sustainability meansthat budget is financed with manageable debt and inflation on yearly basiswhile dynamic sustainability is related with the solvency of the governmentover the continuous time period. It has also been emphasized that fiscalsustainability does not necessarily mean and require optimal fiscal policy. Inthe context of post financial crisis scenario, the authors have analysed thepersistence of fiscal unsustainability among major Asian countries. They haveput forward the argument that persistent use of countercyclical fiscal policiesby developing countries have resulted in making fiscal sustainability as animportant concern of fiscal policy in all these countries.In the recent years,fiscal sustainability is considered crucial for price stability as well as growthin GDP and investment by the policy makers, investors and corporate world.


Measures of Fiscal SustainabilityConventionally, fiscal sustainability has been assessed in terms of indicatoranalysis. The first framework was developed by Domar (1944) where growthrate greater than interest rate is a necessary condition for sustainability.Buiter (1985) condition suggests that the ratio of public sector net worth tooutput should remain stable. Further, the two basic conditions for sustainabilitywas added by Blanchard (1990); Chouraqui et.al (1990), viz., a) the ratio ofdebt to GNP should eventually converge back to its initial level, and b) thepresent discounted value of the ratio of primary deficits to GNP should beequal to the negative of the current level of debt to GNP. Sustainability andStability are not different terms and solvency is one aspect of them andnecessarily does not require optimality. It assumes that projected paths ofeconomic growth, savings, investment, interest rate and fiscal balance behaveindependently. It has been further established that for stability it is also notnecessary that debt over the time has to be declining. In this context intertemporal budget constraint is the most important aspect of fiscal sustainability,which clearly means that current value of spending (including interest anddebt repayment) has to be equal to the current value of revenues. Theseauthors above have explained sustainability also in terms of backward andforward looking approach, based on respectively, ex-post and ex-ante sense ofinter temporal budget constraint faced by the government. While backwardlooking approach focuses more on assessing the fiscal consolidation process,forward looking one assesses medium and long term rules from a base yearperspective. Another important aspect of fiscal sustainability has been estimatedas weak and strong sustainability conditions. If the rate of economic growthis greater than debt stock growth it is considered as weak fiscal sustainability.If this were further accompanied with stationarity of debt, then it is termedas strong condition of sustainability. Chalk & Hemming (2000) used a termTax-Gap indicator approach for assessing sustainability on the basis of theabove mentioned conditions. In other words, when non-interest revenues aregrowing at the rate equal to the annual value of non-interest expendituresplus the interest rate growth differential multiplied by the initial level ofdebt, then revenues can be termed sustainable.

Fiscal Sustainability Measures and Impact on Economic GrowthFiscal consolidation and related reforms had various dimensions but the majorfocus was on controlling revenue and fiscal deficit and creating primary surplus.These measures initially contributed in enhancing economic growth but couldnot correct the supply side bottleneck and therefore growth stabilisation wasstill a challenge. Perhaps, the reasons behind this challenge were non-increasinggovernment revenues on one side and the huge socio-economic infrastructureinvestment gap on the other.



From the calculations reported in Table-1, it can be observed that absolutevariations in gross primary deficit and fiscal deficit have been very significantfrom 2008-09. In 2007-08 fiscal deficit was Rs.1269.12 billion and gross primarysurplus was Rs.144 billion. By 2011-12 fiscal deficit reached its highest levelsof Rs.5159.90 billion leading to a primary deficit of Rs.2428.40 billion. Thiscountercyclical fiscal policy made the sustainability question pertinent as theinterest payments without any change in interest rates rose from Rs.1710.30billion to Rs.2731.50 billion during the same period. Since then, we observe aforceful contraction in deficits and expenditure as compared to the earliertime period. Further, there has been no relationship or rather an inverserelationship between fiscal deficit and capital expenditures by the government.Capital expenditure amount has been always lower than the interest paymentsand subsidies. In 2016-17, interest payments have risen to Rs.4807.14 billionand capital expenditures were Rs. 2846.04 billion only. It is important tohighlight that according to the 2017-18 revised estimates, interest paymentswill rise upto Rs. 5308.43 billion and capital expenditures will decline slightlyto Rs.2734.45 billion.The table indicates towards lack of consistency in the fiscal policy or may bethe ineffectiveness of the policy as indicated by Lucas. The above mentionedfeatures, definitely has implication for economic growth in the times whenprivate sector is not responsive towards the contractionary fiscal policy. Taxrevenues in aggregate also appear to be less responsive towards economicgrowth during the reference time period; rather 2008-09 and 2011-12 havebeen two interesting years in particular where decline in growth rate led tosubstantial increase in deficit and decline in tax revenues. Point to pointvariations clearly reveal that fiscal variables are not responsive towards growthdue to the manner in which fiscal consolidation has been pursued. Therefore,analysing the Indian economy during the same time period on the basis offiscal sustainability indicators seems appropriate.In the case of India, there have been some major studies estimating andexplaining various aspects of sustainability. Jha and Sharma (2004) haveused the co-integration technique for the time series data on government revenuesand expenditure since 1950s. They explained that when structural breaks aretaken into account, government expenditures and revenues were found to beco-integrated and, therefore, growth in government debt in India is within therequirements of sustainability. Co-integration indicates simultaneous adjustmentin revenues and expenditures. For instance, when interest payments to GDPratio rose, adjustments in expenditure components, such as, capital expendituretook place automatically, although giving undesirable results.Rangrajan and Srivastava (2005) analysed the question of fiscal sustainabilityunder the Domer’s framework and stated that deficit and debt are inevitable,


but appropriateness of its level, needs to be determined within a medium andshort run fiscal policy stance. Authors have used decomposition analysistoexplain that fact that large part of fiscal deficits in India are structural innature, therefore, if revenues are not increasing, government and privateinvestment both fall. They have investigated the interrelationships betweenfiscal deficit, debt, economic growth, savings and investment in India througherror correction model (ECM) for 1950-51 to 2001-02. The authors suggest thatfor the medium term stabilisation, it is necessary to simultaneously reduce thedebt, deficit and interest payments with respect to GDP. The research alsosuggests a fiscal correction and adjustment plan on the basis of the decompositionanalysis which is broad based and inclusive of most of the fiscal variables. Itlays emphasis on the increase in capital expenditure, mainly on infrastructureby the government, thus supporting expenditure restructuring to a great extent.

Box-2: Summary Indicators for Fiscal Sustainability

Indicators 2012-13 to 2017-18 {change from last 6

years}

Implication

Rate of Growth of Public Debt should be lower than rate of growth of Nominal GDP (D-G<0) or (Dg<Gg)

9.15 <10.43 {3.4} Both have declined (weak sustainability condition fulfilled)

Rate of growth of public debt should be lower than effective interest rate (D-i<0) or (D<i)

4.0 Higher

Real Rate of interest should be lower than real output growth (r-g<0)

-6.0 Real interest rate has remained negative with high inflation

Primary Balance should be in surplus (PB/G>0) -0.89 {-0.95} Deficit size has reduced

Primary Revenue Balance should be in surplus and should be adequate enough to cover interest payments (PRB/G>0) and (PRB/IP>100)

Deficit Never met

Revenue Receipts as percent to GDP should increase over time (RR/G)↑↑

8.97 {-0.72 % } Declining

Revenue variability over time should be decreasing over time : CV (RR/G)↓↓

0.06 {1.24} Increasing

Public Debt to Revenue receipts ratio should decline over time D/RR ↓↓ [indicator for vulnerability of country’s public finance and solvency of Government].

5.37 {-0.09} Revenues are increasing far slowly compared to debt

Public Debt to Tax Revenue ratio should decline over time D/TR↓↓

6.66 {-0.02} -as above-

Interest burden defined by interest payments as percent of GDP should decline over time

3.20 {-0.10} Interest payments growing more than 8 percent annually

Interest Payments as a percent of Revenue Expenditure should decline over time

27.0 (2.0) Interest payment growing faster

Interest Payments as percent of Revenue Receipts should decline over time

35.75 {1.6} Interest payment growing faster

Author’s calculations



Kaur and Mukherjee (2012) have made an attempt to empirically investigatevarious phases of sustainability of Indian fiscal data during 1980-81 to 2012-13. It also explains the significant non- linear relationship between debt andgrowth and other macroeconomic variables in India resulting in a negative ofdebt. The authors found that necessary conditions of sustainability (1 & 3mentioned in Box-2) are always met but sufficient conditions based on 4 andothers in Box-2 and stationarity of fiscal variables are not fulfilled in case ofIndia. The authors have estimated the fiscal sustainability issue on the basisof inter temporal budget constrain and fiscal response function. The co-integrationconditions as estimated in Jha and Sharma (2004) have been confirmed. However,the paperdoes not discuss the broader issues of fiscal sustainability such asimpact on private investment and restructuring impact of public expenditure.The gap between debt, growth and interest rates are actually narrowing.There has been a significant increase in interest payments among all thefiscal variables, while coefficient of variation in majority of the variables hasbeen increasing. The major problem is the slowing GDP growth, along withcore inflation (i.e. other than food and fuel). There is therefore ample spacefor adopting expansionary fiscal policy, not only from the expenditure sidebut also from the tax revenue side to enhance the supply side effectiveness offiscal sustainability measures.

ConclusionThe relationship between economic growth and fiscal variables appear to bedynamic and therefore needs continuous examination. It is imperative to observethat with every deviation from a long term trend in growth, fiscal variablesbehave differently. The effectiveness of rules for fiscal sustainability, giventhe Indian experience between FRBM, 2005 and 2017 and revised FRBMframework, is yet to be established. In order to maintain fiscal sustainabilityand fiscal discipline and to control inflationary pressures, government haslargely resorted to deficit and expenditure compression. In this process, GDPgrowth has often remained below expectations and thus raises the enquiry forthe fiscal consolidation programme.The key challenge involves balancing between public interventions andmaintaining market confidence in the sustainability of public finances. Theanalysis in this paper shows as the GDP growth has slowed down after 2008-09, the gap between savings and investment is widening. Due to the supplyside rigidities of the fiscal policy, decline in inflation rate has not contributedin economic growth. The burden of 3 percent of fiscal deficit target has led toalmost negligible change in capital expenditures, as compared to revenueexpenditures and its various components, such as, interest payments andsubsidies. Therefore, the paper questions the existing classification of socio-


economic infrastructure as under revenue account instead of capital account.Revenues of the government appear to be growth enhancing and fiscal discipline,neutral in the long run. Fiscal variables have been very inconsistent indicatingtowards lack of consistency in the policy stance in the short to medium term.In contrast to the New Classical School’s argument of superiority of rule overdiscretion, there have been more instances of government acting as an agentwith asymmetric information and economy with larger rigidities. Asymmetricinformation is due to the structural rigidities in the fiscal variables over thetime. Therefore, the paper observes that there is a need to explore more andmore discretionary policy options, such as restructuring of governmentexpenditures, targeting of revenue and expenditure components rather deficitand debt, anyhow.

Notes1 Refer to Quarterly Report on Public Debt Management, published by the Budget

Division of Ministry of Finance, Government of India, available on the websitehttps://dea.gov.in>public-debt-management/pdf.

2 “Investment and Savings Slowdowns and Recoveries: Cross Country Insights forIndia”, Chapter 3, Economic Survey 2017-18, Volume 1, published by Government ofIndia.

3 Refer to Table 1 on page 44 of Chapter 3 in the Economic Survey 2017-18, Vol. 14 The idea behind the reported figures for 2011-12 in Part (B) of the table is to

highlight the significant impact of the calculation methodology change in case ofgrowth and gross domestic capital formation.

5 Barro, Lucas, Sargent & Wallace, Kydland& Prescott are some of the pioneer of thisschool. Their argument is based on agents forming rational expectations and macrodecisions based on micro-foundations. Therefore, they criticized the discretionarypolicies proposed by the Keynesians and criticized by the Monetarists during late1970s.

ReferencesAdams, C. et al, (2010) “Fiscal Sustainability in Developing Asia”, ADB Economics Working

Paper Series No. 205, JuneBlanchard, Olivier J., et al. (1990) “The Sustainability of Fiscal Policy: New Answers to an

Old Question”. OECD Economic Studies, No. 15 (Autumn).Buiter, W.H. and U. Patel (2010) “Fiscal Rules in India: Are They Effective?”. National

Bureau of Economic Research Working Paper No. 15934, April 2Chalk, Nigel and R. Hemming (2000) “Assessing Fiscal Sustainability in Theory and Practice”.

IMF Working Paper No. WP/00/81.Domar, E.D. (1944) “The Burden of the Debt and the National Income”. American Economic

Review, Vol. 34, No.4.



Government of India (2018), Economic Survey, Department of Economic Affairs, Ministryof Finance, Government of India.

IMF (2003), “Sustainability Assessments—Review of Application and MethodologicalRefinements”, SM/03/206, accessed from http://www.imf.org/external/np/pdr/sustain/2003/061003.pdf.

Jha, R. and Sharma, A (2004) “Structural Breaks, Unit Roots and Cointegration: A FurtherTest of the Sustainability of the Indian Fiscal Deficit”. Public Finance Review, Vol.32, No.2.

Kaur, B. and A. Mukherjee (2012) “Threshold Level of Debt and Public Debt Sustainability:The Indian Experience”, Reserve Bank of India Occasional Papers Vol. 33, No. 1 &2.

Lahiri, A. & R. Kannan (2004). “Indian Fiscal Deficits and their sustainability in perspective”,in Fiscal Policies and Sustainable Growth in India, Favaro, E. & Lahiri, A. (eds.),Oxford University Press, New Delhi

Patnaik, P. (2017) “Once More on the ‘Humbug of Finance”, Economic & Political Weekly,March 4, 2017 Vol LII No. 9

Rakshit, M. (2000) ”On correcting fiscal imbalances in the Indian Economy: Some Perspectives”,Money and Finance, ICRA, July-September issue.

Rangrajan, C. & D.K. Srivastava (2005), “Fiscal Deficits and Government Debt: Implicationsfor Growth and Stabilisation”, NIPFP, Working Paper No. 35.


Governance for Happiness

P.K. Chaubey*

IntroductionOrganizations after organizations, nations after nations, and institutions afterinstitutions, and, let us hope, people after people are increasingly viewinghappiness as the proper measure of social progress. It is expected thatgovernments would soon consider happiness to be the central goal of theirpublic policy.World Happiness Report 2017—the fifth in series—is happy to note that theOECD, an organization of developed countries— professing market economyin no uncertain terms, has recently committed to redefine its growth narrativeto put people’s wellbeing at the centre of governments’ efforts, and points outthat UNDP Chief Helen Clark asserted against the tyranny of GDP and saidthat paying more attention to happiness should be part of our efforts toachieve both human and sustainable development. Not detaining ourselves toquestioning these assertions or affirmations, somewhat weak in logic as theyare, we simply note that human happiness, even if in name, is catchingattention of the people who matter in public policy making.We are happy to see that the idea of happiness as the true indicator ofdevelopment and social progress has been approved by the so-called developedcountries in the West at the official level. Our confidence was shaken underthe influence of colonialism and we were also overawed by the way theyimposed their ways of life on us. So, unfortunately, we first accepted whatthey thought is development and changed our views when they changed theirviews regarding development. When we started providing our take ondevelopment by questioning received wisdom we still sought their approbationand that happened when genuine development was oddly phrased as humandevelopment. That did not happen luckily when freedom was proposed asdevelopment even it was an effort in overstretching the word freedom. However,we consider it our success that our idea of real social progress in terms of

* Past President, Indian Economic Association

ARTICLE 8



human happiness has caught the attention of the western modern thinkersand policy makers at a large scale.We are really happy to note that Nordic countries along with Switzerland andthe Netherlands have been in the list of top 10 in all the Reports since 2012till 2018, which include also disparate countries like Canada, New Zealandand Australia. European countries are small and non-European countries arenot big, which have been rated as happy. They may not be counting for morethan 1.0 percent of total world population.For the period 2014-16, as per World Happiness Report 2017, India was faraway at 122nd place while our South Asian partners are better exceptAfghanistan—Pakistan at 80, Bhutan at 97, Nepal at 99, Bangladesh at 110,and Sri Lanka at 120. Subsequent Report 2018 tells that India lost substantiallyby 11 ranks and 0.698 in a scale of 10 from in the period 2015-17. All ourneighbours, except Afghanistan did better. The same stands true of Chinawho are better in human happiness terms as well.We are still proud of the fact that our idea has finally triumphed. But whatshould worry us is the fact that 56 countries out of 126 for which computationwas made in 2005-07 have lost over the decade while both the periods arenormal while they might have been well in terms of growth and povertyreduction. Again 59 out of 141 countries lost and they lost between 0.12 and2.17 points between 2008-10 and 2015-17. What should one worry about iswhether and how much countries gain in absolute terms. Why should anycountry lose, and lose over a period of decade? But I feel there is somethingamiss with the way it is being captured and measured in the western literature.Liberal individuals are not monopoly of the Orient world whether India orBhutan, or China and Japan though chauvinists among us often make out itto be a special characteristic, say, of Indians. But it took so long fordevelopmentalists, particularly development economists, to see through sosimple an idea that ultimate goal of all human activities is to move away allkinds of sufferings which humans undergo in the course of living and to scalethe ladder for happiness and reach if one could the point of bliss. In fact, inthe course of thinking about development in last couple of centuries andparticularly since 1940s, GDP triumphed. Material progress, as calibratedthrough GDP, blinded us about imperilment of stability, erosion in communitycohesion, loss of dignity of the weak, sacrifice of ethics and scruples, degradationrisk of environment.In this piece, my attempt is to briefly review the history of developmentsaround the idea of human happiness in the modern times in the context ofdevelopment, to see how the Western scholarship is attempting to ‘redefine’the idea of happiness, to point towards the oriental view about happiness —


as portrayed in ancient Indian literature, and finally what could governanceparameters be for what could be called collective happiness.

History of the Idea in BhutanIt is reported that in 1979 in an interview at Bombay Airport, the then Kingof Bhutan Jigme Singye Wangchuk (1972-2006), returning from NAM Summitin Havana, in response to a question posed by an Indian journalist as to whatBhutan’s Gross National Product was, aired his view of Bhutanese developmentphilosophy. He said, ‘We do not believe in Gross National Product becauseGross National Happiness is more important’. It is also reported that thepropagation of the idea of Gross National Happiness in Bhutan by Wangchukamong his people was highlighted by John Elliot of the Financial Times inhis weekend article The Modern Path to Enlightenment on May 2, 1981.It has transpired that the young Wangchuk who ascended the throne (twoyears after his father passed away) in 1974—the time worst stock marketcrash had taken place since the time of Great Depression, started impressingupon his people that peace and collective happiness were more importantthan the so-called economic development of the country even though, followingher neighbours, Bhutan had started its first five year plan in 1961 andconstituted Planning Commission in 1971 under King Jigme Dorji Wangchuk(1952-1972), Singye’s father. Riding on the horseback, mingling with peopleat campfires and taking water from springs, talking to the civil servantsand policy makers, it is widely reported by Bhutanese scholars, the youngKing Jigme Singye outlined his vision for collective happiness of his people.We ought to remember that poor understanding of development whether interms of per capita income with or without structural change and economytransformation through mechanism dealing with duality, pursued for a quarterof a century, was just challenged by Dudley Seers in 1969 in New Delhi.The disquiet was broken feebly by David Morris towards end of 1970s, whenthis young king asserted it politically. But the marriage of welfare economicswith development economics was yet a distant phenomenon. Capabilityapproach set against commodity approach to well-being was to emerge adecade after in the Tenner lectures delivered by Amartya Sen. Challengeagainst the parameters of development adopted by World Bank was yet tobe articulated by Mehbub-ul-Haq in terms of oddly phrased idea of humandevelopment. While welfare economics got duly admixed with developmenteconomics and development did not remain preserve of economics, idea offreedom as development was yet to be articulated. However, all this while,



Bhutan was nursing the dream of pursuing what it called collective happiness,not as a philosophy of individual achievement, but of the people as a whole.However, as Tashi Dorji tells us, the outside world came to know of the ideawhen Bhutan Prime Minister Jigme Yoser Thinley spoke about it in hisaddress in the Asia-Pacific Millennium Summit organized in 1998 in Seoul.Till then, actually Bhutanese hopefully thought that it is such an obviousidea that it needed no advocacy. To the question why Bhutan had kept thisphilosophical idea in incubation for a long period of quarter a century andwhy it is being shared now (in 1998), the Prime Minister Thinley held thatdonor countries and donor partners who visited the country found it a wonderfulidea and wanted it to be shared with the rest of the world. One of the falloutswas that Centre for Bhutan Studies (CBS) came into being in 1999. Thescholars at the Centre felt that there could not be more opportune time as1990s was full of international financial crises—Mexican (1994) and Asian(1997)—pointing towards vulnerability of Bretton Woods system.In 2004, Bhutan decided to organize an International Conference/Seminar inThimpu, which was followed by one in Canada (2005), Thailand (2007), Bhutan(2008), and Brazil (2009). In Thimpu seminar, Gross National Happiness wassuggested as a bridge between the fundamental values of kindness, equality,and humanity on the one hand and the necessary pursuit of economic growth.This is interesting to note that Bhutan is the first country to explicitly statehuman happiness among the Principles of State Policy in its Constitutionwhich came to be written for the first time in 2008—thanks to the formerking who thought that the people of Bhutan have enough political maturityto have a formally written Constitution. The Article 9(2) says that the Stateshall strive to promote conditions that will enable the pursuit of Gross NationalHappiness. Around this time, the Planning Commission was renamed as GrossNational Happiness Commission. The King had occasion in a MadhavraoScindia Memorial Lecture (delivered in New Delhi on 23 December 2009) toassert Bhutanese philosophy:

We strive for the benefits of economic growth and modernization whileensuring that in our drive to acquire greater status and wealth we do notforget to nurture that which makes us happy to be Bhutanese. Is it ourstrong family structure? Our culture and traditions? Our pristineenvironment? Our respect for community and country? Our desire for apeaceful coexistence with other nations? If so, then the duty of ourgovernment must be to ensure that these invaluable elements contributingto the happiness and well-being of our people are nurtured and protected.Our government must be human.

It may be remembered that pursuit of happiness was one of three unalienablerights of man—Life, Liberty and pursuit of Happiness, that were asserted in


the Declaration of Independence which was adopted on the 4th of July 1776—240 years ago. But the men at the helm of political affairs at stage forgot thereal meaning of Happiness and, as a result, material wealth in the US roseenormously while happiness remained stagnant, if not worsened, in aggregateterms.

Gross Happiness IndexBhutan decided to quantify happiness in 2005 and thus turn what was aphilosophy into an index. The official survey was conducted in Bhutan in late2006 and early 2007 and it was revealing that more than 2/3rds Bhutanesethought that income, family, health, and spirituality were the most importantfor happiness. Happiness is obviously an emotional, intangible, subjectivestate of mind of an individual but, for collective happiness, there is a need forbroad guiding principles and somewhat objective indicators. Underlying theview that it is an evolving concept, it has to have certain set of core principles.Broad guiding principles, called in literature the pillars are at present four:(1) sustainable and equitable socio-economic development, (2) environmentalconservation, (3) preservation and promotion of culture, and (4) good governance.Good governance may well be a means. Later, a Canadian couple with thenames Michael and Martha Pennock joined hands with Bhutanese scholarKarma Ura at the Centre for Bhutan Studies, who articulated nine domainsfor conceptual analysis for policy making, which are: (1) psychological wellbeing,(2) health, (3) time-use, (4) education, (5) cultural diversity and resilience, (6)good governance, (7) community vitality, (8) ecological diversity and resilience,and (9) living standards. These nine domains share 33 clustered indicatorsover 124 building block variables for the purpose of survey. We can wellguess that they should have a lot of multi-collinearity. Therefore, in certaincases, for example, in selection of appliances in the asset category underliving standards, principal component analysis is applied. However, whiledomains are equally weighted, variable weights vary with subjective-ness ofthe variables—the higher the subjectivity, the lower the weight. Aggregationmethod followed is said to be Alkire-Foster which was developed in the contextof multidimensional poverty.The results of the survey conducted in 2010 for sample of over 7000 persons,show that around 40 percent people can be put in the category of ‘happy’ with66 percent cut-off for GNHI while 10 percent are definitely unhappy.The authors of GNH-Bhutan Report, appended as a case study in WorldHappiness Report (2012), make a distinction with the western literature on“happiness” on two counts. While the western literature focuses on subjectivewell-being to the exclusion of other dimensions and does not internalize



responsibility and other-regarding motivations explicitly, GNH-Bhutan Reportdoes.In contrast to GNH-Bhutan Report, the World Happiness Reports follows vanPraag to quantify subjective wellbeing and categorise happiness as momentaryand evaluative, rather than stable or placid, if not permanent. We make adistinction between momentary, fleeting pleasure and stable happiness, roughlyequivalent to fluctuation and trend.

Meaning of HappinessHappiness is such a simple word but at the hands of analysts it has acquiredso many meanings. Joy, enjoyment, pleasure, ecstasy, satisfaction, contentment,and bliss are all positive feelings along with happiness. At times, they areused synonymously and, as a result, the distinctions have blurred. Yet, it isclear that pleasure is sensual, experienced through sense organs and thereforecome from circumstances, objects and people outside the person who is feelingit. Enjoyment is again consumption or consummation of objects outside theperson. May be natural beauty of Bhutan. Happiness on the other hand is astate of inner fulfilment; it is closer to contentment. It is said that outsidecircumstances might influence state of happiness but is not always dependenton them. One ought to distinguish happiness from the fleeting, pleasurable‘feel good’ moods. A rough distinction between pleasure and happiness can bemade by using equivalent Sanskrit words aanand and sukha. Similarly,distinction between joy and happiness may be made by using Hindi wordskhushi and sukha. Sanskrit subhashitam says, Santosham param sukham.Contentment is the ultimate happiness, does not come from outside.Everybody does not make such a distinction. Even the endeavor of freedomfrom suffering (dukha) could be seen as sukha. This is how Buddhist philosophyis portrayed. Want satisfaction should be more taken relief from pain. Howcould it be taken as a positive sukha? However, those who go deep into fournoble truths taught by Buddha, do not equate them with being born, gettingold, falling sick and dying but find them as suffering, cause of suffering,cessation of suffering and path of cessation of suffering. So, it is just notrelief from suffering but cessation of suffering. Modern economic thinkerswent to use the word want, the feeling of lacking in something. JK Mehtawho went into the question suggested the best state of mind is to be inwantlessness—which comes with detachment from external stimuli.We can easily agree with Aristotle that ‘Happiness is the meaning and thepurpose of life, the whole aim and end of human existence’ and ‘happinessdepends upon ourselves’. He is said to have spoken of four levels of happiness.First level, laetus, is the sensual gratification based on external things, whichis intense but short-lived. We can equate it with pleasures. Second level,


felix, is ego gratification that comes from admiration, feeling bigger, better,higher than others. This is everything for some people and for others it maybe a minor factor. The third level, beatitudo, emanates from doing good toothers—compassion, love, friendship, fraternity, unity, etc. It gives deeperfeeling, which is long lasting. The last one, sublime beatitudo, is the desirefor fullness, perfection. It is said to be difficult for description—may bespirituality, philosophy, art, scientific endeavours or trying to find meaningand purpose of existence.However, my interest is not so much in the metaphysics of happiness and thekindred ideas but relate the concept with the society. Therefore, I considerthe third level of happiness, as suggested by Aristotle the most important.

GovernanceRe-minted in 1990s and darling of the multilateral organisations like the UN,IMF and WB, word governance is used with several adjectives to signify level,field, activity or outcome. For our purpose, it is public governance, involvinggovernment apparatus and administrative processes for common good. Thegoal of common good often articulated in Benthamite phrase ‘greatest good ofthe greatest number’ or ‘bahujan hitay, bahujan sukhay’ may be better put as‘sarvajan hitay arvajan sukhay’. Brihadupanishad has a shloka which is asfollows:

Sarve bhavantu sukhinah, sarve santu niramaya;sarve bhadrani pashyantu, ma kashchid dukhbhag bhavet.

In English, it may be rendered as ‘may all be happy, may all remain freefrom disabilities, may all see auspicious things, many none suffer sorrow’.Thus, it suggests individuals to think good of others, not only a few but of all,irrespective of race, caste, colour, culture, creed, sex or place of residence. Infact, the shloka from Ishvashupanishad, ‘ten tyakten bhunjitha’ tells us thatonly those who sacrifice for others really enjoy, sacrifice for family membersand relations, sacrifice for neighbours and village folk, sacrifice for communityand distant folks, and finally sacrifice for humanity and perhaps other beings.That is, according to Aristotle, the third level of happiness. In fact, a veryinspiring shloka in the Mahaupanishad says that people of liberal character,with magnanimous heart, consider the whole world as their family (udaar-charitanaam vasudhaivakutumbakam).If these be not taken as the guide for the State, then there is a little latertext, by Chanakya, called Arthashastra, where the king is advised to see hishappiness in the happiness of his subjects and consider his interest in theinterest of the subjects; whatever pleases the king is not in his interest, theinterest of the subject should please him, should make him happy. The Sanskritverse is like this.



Praja sukhe sukham rajyaha prajanamcha hitehitam,Natma priyyam hitam rajanaha prajanam cha hitam priyam.

It is learnt that in post-civil conflict in Bhutan, which led to its unification,the legal code of 1729 did say rather bluntly “if the government cannot createhappiness for its people, there is no purpose for the government to exist.”Thus, it is collective happiness, call it at any level—national or global. For anation, generally speaking, there exists a government and it should play itsrole in making its people happy, individually and collectively. It should playits role in inculcating such values as would make the people to think ofothers before themselves. Former Bhutan PM Thinley did say, ‘We know thattrue abiding happiness cannot exist while others suffer, and comes only fromserving others, living in harmony with nature, and realizing our innate wisdomand the true and brilliant nature of our own minds. It includes harmony withnature (again absent from some Western notions of happiness) and concernfor others’. In the western literature, happiness is too individualistic. Weneed collective happiness. Individual happiness may be Nero’s but collectivehappiness would not permit existence of Neros and government ought to bealive to see nobody turns Nero.However, there is a good caution that basic needs of human beings have to besatisfied. So, we need not shun the material world. Life need not be lavish orluxurious and so much was proved Easterlin in connection with US. But ithas to be comfortable. Gandhi was comfortable with agricultural civilisationand never advised to go back to jungles. Kabir was happy so long he is ableto feed the visitor without letting the family starve. And, let us admit, needsmay be dynamic in nature. But important to note is that poverty may degenerateone into committing wrongs. Deendayal Upadhyaya also agreed with the saying‘vubhukshitam kim na karoti papam’. Eradication of absolute poverty is amust but too much of inequality also does not bode well.Happiness requires righteous conduct and right conduct requires resources,resources require governance by State, governance requires non-indulgence andnon-indulgence gives humility, humility makes one serve the old and wise.

सख यमलधमः, धम यमलअथः अथ यमलरा य, रा य यमलइि यजयः इि याजय यमलिवनयः, िवनय यमलव ोपसवः व ोपसवायिव यान, िव याननआ मानस प त समपिदता मिजता ममभवित, िजता मासवाथसय यत


Sukhasya moolam Dharmah; Dharmasya moolam ArthahArthasya moolam Rajyam; Rajyasya moolam Indriya JayahIndriyajayasya moolam Vinayah; Vinayasya moolam VruddhopasevahVruddhopasevaya Vijnanam; Vijnanena atmaanam SampadyetSamapaditatma jitatmama Bhavati; Jitatma sarvarthe SanyujyateThe State has undoubtedly a great role to play in creating conditions forhappiness in a society but it has a role in creating such atmosphere whereright values prosper. But we also require Siddharthas to create right kind ofvalue system, anew. The long establish system that allowed the claim of theshooter over a game was challenged by Siddhartha and a new jurisprudencewas created whereby saver of the game had a better claim over it.I have an appeal to all those who are working or would work on happinessthat they should avoid the use of adjective ‘gross’ alongside ‘happiness’ ashappiness can never be gross. It is always net. You do not subject anythingfrom it to obtain net counterpart. It is neither crude.

ReferenceRevised version of inaugural speech delivered at the International Conference on Interplay

of Economics, Politics, and Society in Development of a Nation, on 1 July 2017,organized by Nitche Institute of Management & Technology at Royal Thimpu Collegein Bhutan, in collaboration with Indian Economic Association and Foundation ofEvidence-Based Intervention.



Identity Crisis and National Register forCitizens in Assam

Roli Misra* & Shipra Srivastava**

ABSTRACT

The concept of identity carries the full weight of the need for a sense of whoone is, together with changes in the group and networks in which people andtheir identities are embedded. It is a process between the identity of the individualand the identity of the communal culture. The migration of people and theirresettlement elsewhere necessarily results in identity issues. In this context,India faced the problem of uncontrolled and illegal immigration along theAssam-Bangladesh border after the emergence of Bangladesh in 1971. Theidentity issue was further accentuated by the emergence of ‘Doubtful’ voters.The failure of the Assam Movement and Assam Accord to bring about anysolution to the foreigners issue paved way for the much controversial updationof National Register of Citizens in the state of Assam, which left 40 lakhpeople stateless. This paper highlights the fate of these victims in the backgroundof the anxiety and concern over the updation of NRC.Keywords: Identity, Assam, NRC, D-Voter, Lucknow

Introduction“Identity” is a keyword of contemporary society and a central focus of socialpsychological theorizing and research. At earlier historical moments, identitywas not so much an issue; when societies were more stable, identity was to agreat extent assigned, rather than selected or adopted. In current times,however, the concept of identity carries the full weight of the need for a senseof who one is, together with an often overwhelming pace of change in surroundingsocial contexts—changes in the groups and networks in which people and theiridentities are embedded and in the societal structures and practices in which

* Associate Professor, Dept of Economics, University of Lucknow, email [email protected].** Research Assistant, Dept of Economics, University of Lucknow, email shipraseema

@gmail.com.

ARTICLE 9



those networks are themselves embedded (Howard, 2000). Furthermore, accordingto Erikson, ‘Identity is a process between the identity of the individual and theidentity of the communal culture.’ He coined the phrase ‘Identity Crisis’ in 1940swhich referred to a person who had lost a sense of personal sameness andhistorical continuity’ (Edgar and Sedgwick, 2004). ‘A sense of identity can bea source not merely of pride and joy, but also of strength and confidence. Andyet identity can also kill and kill with abandon. A strong and exclusive senseof belonging to one group can in many cases carry with it the perception of distanceand divergence from other groups. Within-group solidarity can help to feedbetween-group discord’ (Sen, 2006).When identities are essentialised or aggrandisedon one axis, people belonging to communities be they caste, clan, religion,language, region, or nation-based develop antagonisms and tend to come intoconflict with one another. Such conflicts between communities could, no doubt,be spontaneous outbursts for protecting a community’s identity or protestingagainst its violation (Jayaram, 2012).In this context, migration of people and theirresettlement elsewhere necessarily results in identity issues, and in conflict. Withchanging destinations their identity elements tends to change. The essay byRajanet.al. (2011) particularly focus on the politics of conflict resulting frommigration. The purpose here is to reflect the problem of that section of religiousminority who has been struggling to prove their citizenship status in the stateof Assam post partition, in the light of the much-publicized updating processof the National Register of Citizens (henceforth NRC).

The GenesisIn this background, India faced a specific issue, after the emergence ofBangladesh as an independent nation: prevention of uncontrolled immigrationalong the Assam-Bangladesh border. The British had opened up Assam wayback in 1886, by introducing the railway in this valley of the Brahmaputra.Since 1947, periodic and large influxes of population from East Pakistan(subsequently Bangladesh) kept coming into Assam, West Bengal, and adjoiningBihar. Assam and other northeastern states, being the least populated, becamethe most promising destinations. Not all who came were Hindus and not allcame as refugees. A large number of Bengali Muslims continued to moveillegally into Assam, to clear and occupy forest lands and the riverine islandsof the Brahmaputra (Singh, 1984). This issue of illegal immigration wasresponsible for the consequent political instability in the state and an agreementby the end of 1982 that these illegal aliens who came between 1951 and 1961would be given Indian citizenship and that those who came after 1971 wouldbe deported, but the status of those who came between 1961 and 1971 remainedunresolved (Baruah, 1986). Later on, the state Assembly elected in 1983 wasdissolved and fresh elections based on revised electoral roles took place inDecember 1985. After all the strong controversy and debate a Memorandum

Identity Crisis and National Register for Citizens in Assam


of Understanding, popularly known as ‘Assam Accord’ was signed betweenAASU, AAGSP, Central and State Governments in the capital city of ‘NewDelhi’ in the early hours of 15th August 1985. The Accord determined 1stJanuary 1966 as the cut-off date for the purpose of detection and deletion offoreigners and allowed for citizenship for all persons coming to Assam from“Specified Territory” before the cut-off date. It further specifies that all personswho came to Assam prior to 1st January 1966 (inclusive) and up to 24th March1971 (midnight) shall be detected in accordance with the provisions of theForeigners Act, 1946 and the Foreigners (Tribunals) Order, 1939. Names offoreigners so detected will be deleted from the Electoral Rolls in force. Suchpersons will be required to register themselves before the Registration Officersof the respective districts in accordance with the provisions of the Registrationof Foreigners Act, 1939 and the Registration of Foreigners Rules, 1939. On theexpiry of a period of 10 years following the date of detection, the names of allsuch persons who have been deleted from the electoral rolls shall be restored.Foreigners who came to Assam on or after 25th March 1971 shall continue tobe detected, deleted and expelled in accordance with law (CSSS, 2018).However, the ‘Assam Movement (1979-1985)’, ‘Assam Accord (15th August1985)’ and the failure of the Assam Gana Parishad Government to identifyforeign nationals in the state still could not bring any political solution of theforeigners issue. Bengal origin illiterate poor Muslims and a section of HinduBengalis continued to be suspected as the illegal occupants of the state. Votingrights of many had been snatched away by the government on the basis ofdoubt on their citizenship. Furthermore, in 1997 the Election Commission ofIndia identified a section of Muslims living in the Char Chapori areas ofAssam, linguistic Hindu minority and even the Rajbongshi people of the stateas ‘D’ voters. The process of identification of ‘D’ voters was unusual. Theofficials of election commission did not follow any criteria in identifying doubtfulcitizens. They ambiguously marked the names of voters in the voters list andare denied them franchisee rights (CSSS,2018).In this way, Assam’s politicshas long been dominated by contestation over citizenship, resulting primarilyfrom unchecked illegal immigration from across the border, particularly fromthe erstwhile East Pakistan (now Bangladesh). Migration/immigration hasbeen a burden of history, one imposed by the colonial regime (Dutta, 2018).

NRC and AssamIn Assam, the possible solution to the existing problem of immigration wasseen in the updation of NRC so as to end the insider-outsider debate in thestate of Assam. The updation of NRC could not be carried out since 1951 dueto several political compulsions. The Language Movement in the 1960s, theAssam Movement in 1980s and such other identity movements fought onethnic lines have heavily impinged on the system of governance in the State


thereby leading to a stalemate on the NRC updation issue. After five decadesof the stalemate, the government initiated steps to update the NRC under thedirect supervision of Hon’ble Supreme Court of India.Initially, the updating of the NRC, 1951 for the state of Assam had beencommissioned by the aforesaid Assam Accord of 1985 which led to the firstever amendment to the Indian Citizenship Act, 1955. This amendment adoptedin 1985 incorporated Section 6A which extended the date of granting citizenshipto immigrants. Later on, it was under the aegis of the Honorable SupremeCourt of India that the process was set in motion along with the issuance ofdirectives to the appropriate authorities to accelerate its progress. Thereby,the Government of Assam along with the approval of the Union Governmentdeveloped the updating process, identifying 16 documents (out of which 12are main documents) that could be used to assert the eligibility of any nameto be a part of the National Register for Citizens.The task of pilot project of updating the NRC had started on 15th June 2010in Barpeta Revenue Circle. Accordingly, the copies of NRC 1951, Electoralrolls of 1961 and 1971 had been re-printed by the district authority. However,these were insufficient and had number of anomalies and confusions. Thenames of doubtful voters along with their family members have been put onhold till the time they are cleared by Foreigners Tribunals. Apart from these,women who only submitted panchayat certificate have also been left out (Sultana2018). All this had led to widespread discontentment and anger amongst theminority community.The Supreme Court, on the other hand, expedited the process through all theobstacles to finally have the first and partial NRC draft released at midnighton 31st December, 2017 which is considered to be a record of all the “bona fide”Indian citizens living in Assam. Accordingly, it is meant to rid Assam of the so-called “Illegal Bangladeshi Immigrants.” The first NRC draft, however, partiallyincorporated names of only 1.90 crore persons out of 3.29 crore applicants,much to the disappointment of indigenous Assamese. In all, 3.3 crore peoplefrom 68.7 lakh families had submitted over 6 crore documents to back theirclaim of being a citizen of India (The Hindu, 2018). The Supreme Court in itsorder, however, directed the NRC coordinator to complete the verification of allpending applications and fixed 30th June 2018 for publishing the final list ofthe NRC (Dutta, 2018). However, given the political and administrative hurdles,the final draft was published a month later on 30th July, 2018. However, in thismuch-anticipated second and final draft of the NRC 40 lakh people were leftout. Though they were not declared illegal foreigners yet, still they were at arisk of becoming stateless. Many allege that it this maze of documentation thatresulted in the exclusion of these 40 lakh people, many of them could begenuine citizens (The Quint, 2018). These 40 lakh people missing from theAssam NRC have been labeled as usual as ‘illegal immigrants’ by the ‘legal



citizens’ of the country; however the officials have preferred to call them as‘undocumented individuals’ (India Today, 2018).But before regarding this as aconspiracy theory to target innocent citizens, there is some startling data whichclearly shows that Assam has a serious problem of illegal foreigners.Besides, this updation process shall also give rise to the deportation challengeof the non-citizens in the light of the uncertain stand of Bangladesh regardingthis issue. The Assamese are unlikely to accept non-deportation of the post-1971 illegal aliens. Yet deportation will be no easy task. The official positionof the Bangladeshi government is that none of their citizens have illegallycrossed the border into India. It is unlikely that the Indian government willrisk deterioration of its relations with Bangladesh and exacerbation of tensionsbetween Hindus and Muslims in India by seeking to force the issue by thedeportation of illegal aliens. There are already indications of opposition inAssam to efforts at soft pedalling the implementation of the accord (Baruah,1986). In this context, the Supreme Court’s stance on the NRC matter afterthe release of the second draft is quoted below (as per India Today, 2018):“The Supreme Court on July 31 said there will be no coercive action by authoritiesagainst over 40 lakh people, whose names do not figure in Assam’s National Registerof Citizens (NRC), observing that it was merely a draft.”NRC programme coordinatoradded, “The government has cleared its stand and it is that people whose names arenot present in NRC will neither be jailed nor will they be deported.”Thereafter a fresh process has been initiated altogether for these 40 lakhpeople whose names are not a part NRC. They have to apply in the prescribedforms available between August 7 and September 28 at their respective NRCSewa Kendras (henceforth NSKs) for the authorities to inform them aboutthe reasons for their names being left out. The next step will be to file theclaim in another prescribed form which will be available from August 30 toSeptember 28, and these claims will be finally disposed off after proper hearings(India Today, 2018).This updating exercise has been carried out for the firsttime post-partition since 1951 census, when this register was first preparedfor the undivided Assam in the background of cross-border immigration. Theconsequent hardship of the people of Assam who have been struggling overyears to prove their identity is unthinkable. Many of them have been victimsof discrimination, hostility and exclusion because of their cultural identities.Every single individual in Assam understands the importance to have one’sname in NRC which is perhaps the primary way to live happily and peacefullyin Assam.

Observations from the FieldIn this context, it is worth highlighting that we had conducted afield surveywith regard to the migration of the Bengali Muslims (of East Bengal origin)


which are called Miya Muslims in Lower Assam. They have migrated fromBarpeta in Lower Assam to Lucknow and have informally developed a systemof door to door collection of waste thus, digressing from their ancestral occupationof being an agriculturalist in Assam. In Lucknow, the public perception isthat they are Bangladeshis, while they call themselves Assamese and theirinhabitations are known as Assamiya basti. The findings from the survey alsoreflect the hardships faced due to the wrath of nature in Assam, the infamous‘identity crisis’ and eventually the tussles of livelihood in the light of thisongoing documentation of the Indian citizens in the National Register ofCitizens (or NRC). This mammoth exercise has affected the people in Assamas well as the migrants in Lucknow equally. The people in the Lucknowslums have been making regular visits to Assam to submit all the requireddocuments to ensure that their names are included in NRC. After the publicationof the final NRC draft, there are many families whose one or more memberhas failed to make it to NRC. A fear psychosis is clearly visible as they aremostly illiterate and poor people who lack adequate resources and are nowperplexed at the fate of these left out members as well the immediate family.To quote the case of one such respondent who is a 70 year old man who hasbeen residing in Lucknow for past 32 years, used to have a small grocery shop(parchoon ki dukaan) in a waste-pickers slum to earn his livelihood, has beendisplaced four times on the pretext that he like others is the illegal occupant ofthe land. He has a family of 8 members. All the members have their namesincluded in NRC except for his 65 years old wife, who as per the governmentrecords of Assam is not an Indian citizen as of now. The old man wheninterviewed said ‘sabka naam aa gaya, bus is boodhi ka naam nahi aya. Abphir jaa raha hai Assam kagaz theek karwaane’ (All other names have comeexcept for this old woman, now I am again going to Assam to get the paperscorrected). A clear sign of concern was visible in his eyes. He has alreadybeen facing multiple displacements within the city and striving to earn hislivelihood. To this has been added the intense struggle to prove citizenship ofhis wife.It would not be out of place to mention that during our intermittent visits tothe slums of migrants as well as the villages in Assam, one finding hasemerged that all the migrants here and back home are very careful aboutsecuring their documents which prove their identity and citizenship. Twoyears back many households in one of the prominent slum in Lucknow calledChandan Basti caught fire due to explosion of gas stove. We happened to visitthat slum to enquire about the extent of loss and spoke to victims. One of therespondent answered that almost everything has been burnt and when askedabout the documents, he replied, ‘kagaaz to aag mein koodkar bacha liya.Kagaz jal jaata to hum kaise batata ki hum India ka hai’ (I saved my documentsby jumping in the fire. Had the documents got burnt then how would I have



proved that I am from India). Their counterparts in Assam, who face the furyof the river Brahmaputra year after year in the form of destructive floods,share similar sentiments with regard to their documents. The floods duringthe monsoons wreak havoc in Assam ruining everything including the houses,cultivation, livestock and assets but for the documents which are indispensableas a proof of the citizenship. This shows how these documents are imperativeto these poor people, being their only identity and the only means to featurein the final NRC draft.

ConclusionMigration is a natural phenomenon and there is a need to understand itseconomic aspect. Development needs to be more inclusive. It is importantthat the identity quest of these people needs to be resolved in a politicallycorrect and socially acceptable manner so that they are included in the processof development and are not seen as a challenge or threat to the socio-economicand political ideologies of the nation. The problem has emerged due to creationof international boundaries without taking into consideration the problems oftheir respective population (Misra and Sultana, 2015).With the increasingburden and pressure on land no nation can make their borders invisible toothers as they themselves lack adequate resources to support their nativepopulation. Migration is generally induced except in case of natural calamities.There is a reason to migrate. It can be temporary or permanent. But why itshould be illegal? Why do people need to cross borders illicitly? Why thepolicies framed are forcing them to be called as Illegal Immigrants? Thisindicates lack of political will from the government. There is absolutely nodialogue between the India-Bangladesh governments regarding the problemof migration. This puts the lives of the so called illegal immigrants in alimbo. Many a times, some have been left in the No Man’s Land to go backto Bangladesh while Bangladesh denied taking them in. This has resulted ingross human rights violation. Hence, respecting dignity of a human being andrealistically finding a solution to their social, cultural and economic problemsshould be the way out as identity ensures stability. Furthermore, the NRCupdate has added to the anxiety and concerns among members of this particularreligious community, who have been long discriminated due to their perceivedstatus as foreigners. Also there is a difference of opinion amongst variouspolitical parties over the NRC issue, along with the reported anomalies inupdation of NRC. In this context, what political solution the present governmenthas to offer for each one of the individual whose struggle to prove theirIndian citizenship still continues is a matter of serious concern. The futureroad map for the names excluded from NRC in Assam, only time will tell.Outside Assam these migrants belonging to this minority group and havebeen continuously adding to the existing slum population of Lucknow, whose


struggle for livelihood and for establishing their identities still continues.Moreover, the state response towards this poor marginalized group is also notof empathy. In Assam most of them are illegal immigrants, in Lucknow theyare outsiders who are subject to regular police verification but for the publicthey are only kuda wallas and kabadi walas (Waste pickers and Waste contractors).With the release of new NRC draft and finding out the foreigners aliasBangladeshis in and outside Assam, we all are looking forward towards thelegitimate bhoomiputras of Assam, once this NRC debate and exercise comesto rest.Note: The period of the survey has been from May 2017 to August 2018. Theobservation from the field survey has emerged from the project sponsored byICSSR, New Delhi.

ReferencesBaruah, Sanjib. 1986. ‘Immigration, Ethnic Conflict, and Political Turmoil—Assam, 1979-1985,’Asian

Survey, Vol. 26, NO.11, pp. 1184-1206, University of California Press. Available at http://www.jstor.org/stable/2644315.

Dutta, AkhilRanjan. 2018. Political Destiny of Immigrants in Assam: National Register of Citizens,Economic and Political Weekly, Vol LIII No 8, Feb 24.

Dutta Anjana ‘Assam NRC: ‘A Journey to Find out if I Am an Indian,’ The Quint, August 28, 2018.Available at https://www.thequint.com/videos/short-doqs/assam-nrc-draft-a-journey-to-find-if-i-am-an-indian. Accessed on 3rd September, 2018.

Edgar, Andrew and Peter Sedgwick (ed). 2004. Key Concepts in Cultural Theory, London: Routledge.Howard, Judith A. 2000. ‘Social Psychology of Identities,’ Annual Review of Sociology, Vol. 26, pp.

367-393, Annual Reviews. Available at http://www.jstor.org/stable/223449.Jayaram, N. 2012. ‘Identity, Community, and Conflict: A Survey of Issues and Analyses,’ Economic

and Political Weekly, Vol xlvii No 44, September 12.Karmakar, Rahul. 2018. “Over 40 lakh left Out of Draft NRC in Assam,” The Hindu,July 30.Misra, Roli and Parvin Sultana. 2015. ‘Birth of a Nation and Lost Identities,’ Journal of Identity and

Migration Studies, Vol 9, No. 3, November.Mohammad Faisal, People not in NRC won’t be Jailed or Deported: All you should know about

Assam’s National Register of Citizens,’India Today, August 6, 2018. Available at https://www.indiatoday.in/education-today/gk-current-affairs/story/assam-nrc-national register-of-citizens-second-final-draft-1300022-2018-07-30. Accessed on 29th August, 2018.

Rajan, S Irudaya, Vijay Korra and RikilChyrmang. 2011. ‘Politics of Conflict and Migration,’ in SIrudayaRajan (ed.), Migration, Identity andConflict: India Migration Report 2011, New Delhi.

Report on ‘NRC Updation in Assam: Prospects and Challenges,’ Centre for the Study of Society andSecularism, May 11, 2018. Available at www.csss-isla.com. Accessed on 17th September, 2018.

Sen, Amartya. 2006. Identity and Violence: The Illusion of Destiny, London: Allen Lane.Singh, Jaswant. 1984. ‘Assam’s Crisis of Citizenship: An Examination of Political Errors,’ Asian

Survey, Vol. 24, No. 10, pp. 1056-1068, University of California Press. Available at http://www.jstor.org/stable/2644219.

Sultana, Parvin. 2018. “NRC Final Draft: What Next?” Northeast Now, August 7, Available at https://nenow.in/north-east-news/nrc-final-draft-next.html. Accessed on 7th August, 2018.



,dkRe ekuorkokn&Hkkjrh; oSfnd thouewY;ksa dhvkèkqfud&laxr iquO;kZ[;k

Jhjke vxzoky*

Hkwfedk&^fpark vkSj fparu*

mikè;k; th dk lEiw.kZ fpUru vkSj euu Hkkjrh; laLÑfr vuqizkf.kr FkkA mudh fpUrk Fkh fdtks Hkkjr vius izkphure oSfnd Kku ls txrxq: ds uke ls fo[;kr Fkk rFkk ftlds vkèkkjij lEiUure jk"Vª ds :Ik esa og lksus dh fpfM+;k ds uke ls tkuk tkrk Fkk] og lfn;ksadh xqykeh ls ihfM+r gksdj] fczfV'k 'kklu dh 'kks"k.kdkjh rFkk foHkktudkjh uhfr;ksa ds dkj.kviuh vkfFkZd lEiUurk gh ugha vfirq lkaLÑfrd o jk"Vªh; igpku Hkh [kksrk tk jgk gSA vaxszth'kklu ls jktuhfrd Lora=rk rks izkIr gks x;h ij Hkkjr dk vketu dze'k% vaxsztksa rFkkvaxszft;r dh ekufld xqykeh ls eqDr ugha gks ldkA vkèkqfudhdj.k ds uke ij if'peh lH;rkdk vUèkkUkqdj.k djrs djrs] Hkkjrh; viuh laLÑfr RkFkk lH;rk dks Hkwyus yxsA Hkkjr dhHkkSxksfyd] izkÑfrd] oSpkfjd] nk'kZfud] lkaLÑfrd i`"BHkwfe ls iYyfor&iksf"kr Hkkjrh; lH;rkds LFkku ij] if'peh LkH;rk dks vkjksfir fd;k tk jgk gSA ifj.kke u dsoy Hkkjr dh orZekuthou'kSyh foÑfriw.kZ gks x;h gS] vfirq Hkfo"; Hkh vUèkdkje; izrhr gks jgk gSA Hkkjr dslokZaxha.k fodkl gsrq Hkkjr dh viuh ewy fof'k"Vrkvksa rFkk Hkkjrh; laLÑfr o thou n'kZuds vuq:Ik] mudk ,dkRe ekuorkokn¼1½ ,d ,slh fopkjèkkjk g]S tks vfr HkkSfrdoknh ik'pkR;laLÑfr o lH;rk ls mRiUu foHkktudkjh] la?k"kZdkjh ekuoh; foÑfr;ksa ls ihfM+r lEiw.kZ ekuorkds vkfRed ekuoh; lq[k o oSf'od lEiUurk dk ,d nk'kZfud] oSpkfjd o vkèkqfud ifjfLFkfr;ksals lqlaxr O;ogkfjd ekxZ izlLr djus esa l{ke gSA ,dkRe ekuorkokn] vc oSf'od Lrj ij]lEiw.kZ thou n'kZu ds :Ik esa Lohdkj fd;k tk pqdk gSA

viuh bl xgu oSpkfjd nwjnf'kZrk dk ladsr] mikè;k; th us] ,dkRe ekuorkokn ij viuhO;k[;kuekyk izLrqr djus ds yxHkx 10 o"kZ iwoZ gh izLrqr dj fn;k FkkA mUgksaus viuh iqLrd^Hkkjrh; vFkZuhfr & fodkl dh ,d fn'kk*¼2½ esa] vkpk;Z fo".kqxqIr pk.kD; ds izfl) xzUFk^dksfVyh; vFkZ'kkL=*¼3½ ds lkFk jfpr] ^pk.kD; lw=kf.k* ds bl izFke lwDr ^lq[kL; ewyèkeZ%A*¼4½ ls gh] ekuo thou esa okLrfod lq[k izkIr djus gsrq] ^èkeZ* ¼deZijk;.k èkekZpj.k½ ds

* iwoZ&izfrdqyifr ,oa vkpk;Z@foHkkxk/;{k] vFkZ'kkL=] cqUnsy[k.M fo'ofo|ky;] >kaWlh&m0iz0A bZ esy% [email protected]

ARTICLE 10



egRo dks layXu dj] vius bl ,dkRe ekuo n'kZu dk ladsr ns fn;k FkkA ;|fi vkxs exèklkezkT; ds egkekR; pk.kD; us ^èkeZL; ewye vFkZ%AA* lw= }kjk] thou esa vFkZ lkèkuksa dhvko';drk dks Hkh fl) fd;k] ijUrq bu nks vfry?kq lw=ksa ls gh Li"V gks x;k fd Hkkjrh;laLÑfr esa vFkZ ,oa lq[k ds eè; èkeZ vko';d gSA fcuk èkeZ ijk;.krk ds ^vFkkZsiktZu ,oavFkksZiHkksx* ls izkIr lq[k&lqq[k u gksdj {kf.kd larqf"V ,oa feF;k izn'kZu o lEiUurk Hkko rksiznf'kZr dj ldrk gS] ij LFkk;h lq[k ugha] ftls fd ,sfUnzd lUrqf"V ds ls vkxs vkfRed lq[kdgk tk ldsA

,dkRe ekuon'kZu esa] ik'pkR; thoun'kZu dh] ;su dsu izdkjs.k vfèkdre HkkSfrd larqf"V dhmiyfCèk dks gh lq[k ekuus okyh laLÑfr rFkk lH;rk ds lkis{k] èkekZuqlkj ¼ekuo èkeZ½drZO;ijk;.krk ds ifj.kkeLo:Ik vuqHkwr lq[k dks y{; ekuus okyh Hkkjrh; thou laLÑfr dhs]orZeku ifjfLFkfr;ksa ls lqlaxr O;k[;k dh xbZ gSA tgka ,dkRe ekuookn] ^lq[kL; ewYka èkeZ%*lw= dk Hkkjrh; oSfnd n'kZu ds vuq:Ik nk'kZfud o lS)kfUrd i{k izLrqr djrk gS] ogha ^vFkZL;ewye vFkZ%* lw= thou ds O;ogkfjd i{k dks izLrqr djrk gSA ;gka ge oSfnd n'kZu ,oa Hkkjrh;lkaLÑfrd thou ewY;ksa ls lanHkZ xzg.k djrs gq;s] ,dkRe ekuo ,oa ekuorkn'kZu ds dsoylS)kfUrd o nk'kZfud i{k ij fopkj djsaxsA

,dkRe ekuorkokn dh i``"BHkwfe] Hkkjrh; laLÑfr&^lR;e~~] f'koe~~] lqUnje~~*A

^laLÑfr* dk ljyre vFkZ gS laLdkj tfur ÑR;A laLÑfr 'kCn] laLÑr Hkk"kk dh èkkrq ^Ñ*¼ÑR;½ ls cuk gSA¼5½ bl èkkrq ls 3 'kCn curs gSaA ^izÑfr* ¼ewy½& ekuoh; iz;klksa ds iwoZ dhifjfLFkfr( ^laLÑfr* ¼ifj"Ñr½ ekuo }kjk laLdkfjr ifjfLFkfr rFkk ^foÑfr* ¼fodkjiw.kZ½&ekuoh; ÑR;ksa ls fodkfjr@nwf"kr izÑfrA ^laLÑfr* ,oa ^lH;rk* esa vUrj gSA laLÑfrekuotfur] ekufld Ik;kZoj.k ls lEcfUèkr gS ftlesa ekufldrk] mnkjrk] lfg".kqrk] izse] vkn'kZ]vkfn tSls xq.k] ikfjokfjd Lrj ij ih<+h nj ih<+h gLrkarfjr gksrs gSaA lkekftd Lrj ijlaLÑfr] lekt ds os lw{; laLdkj gSa ftuds ekè;e ls yksx ijLij lEizs"k.k ¼transmit mutualty½djrs gSa thou dh vfHko`fRr;ksa ¼Tendencies½ vkSj Kku ¼Knowledge½ dks fn'kk iznku djrs gSaA;g laLÑfr dk vHkkSfrd i{k gSA HkkSfrd laLÑfr mu fo"k;ksa ls tqM+h gS ftuls gekjs futh]ikfjokfjd o lkekftd vkpj.k] ijLij lEeku O;Dr gksrk gS] ;g ^lH;rk* ¼Civilization½dgykrh gSA ^lH;* dk vFkZ gS lHkk esa ¼pkj yksxksa ds eè;½ cSBus@fcBk;s tkus ;ksX;A la{ksiesa ^laLÑfr* ekuo lekt ds ekufld ^vkUrfjd ifj"dkj o fodkl dk rFkk ^lH;rk* gekjsokg~; HkkSfrd vkpj.k] jgu&lgu Lrj ds ifj"dkj dk |ksrd gSA

laLÑfr izÑfr iznRr ugha gksrh gSA vfirq izÑfr fufgr dfri; HkkSxksfyd o uSlfxZdifjfLFkfr;ksa esa] fofHkUu Lrjkss a ;Fkk oS;fDrdHkko o LoHkko] ikfjokfjd] lkekftd] jk"Vªh; olkekU; oSf'od lUrqyu dh izfdz;k }kjk izkIr gksrh gSA ;s gekjh fojklr esa fufgr gksrh gSrFkk dze'k% ifjofrZr ifjfLFkfr;ksa ds vuqlkj ifj"Ñr o fodflr gksrh jgrh gSA ;gh dkj.kgS fd lEiw.kZ fo'o dh fHkUu fHkUu HkkSxksfyd o uSlfxZd ifjfLFkfr;ksa ds dkj.k] l`f"V ds fofHkUuHkw&Hkkxksa esa i`Fkd & i`Fkd laLÑfr o lH;rk dk fodkl gqvk gSA Hkkjr tSls fo'kky jk"Vª dh



HkkSxksfyd o uSlfxZd ifjfLFkfr;ksa esa izÑfr o izkÑfrd lkèkuksa] tyok;q vkfn dh Ik;kZIrfofoèkrk rFkk izpqjrk ls vkIykfor Hkkjrh; laLÑfr rnuqlkj iYyfor gqbZ gSA vjc o vÝhdulaLÑfr;ksa ij jsfxLrku] ty vHkko] vfr xeZ tyok;q dk rFkk if'peh ;wjksih; ns'kksa esa vfr'khr rFkk izkÑfrd lkèkuksa dh vYirk dk izHkko ogka dh laLÑfr ij iM+k gSA

Hkkjrh; laLÑfr dh viuh dqN vUrfuZfgr fof'k"Vrk;sa gSa tks fd bls ;wukuh] vjch] ik'pkR;o vU; iwokZR; laLÑfr;ksa ls fHkUu igpku iznku djrh gSaA vfr izkphurk o fujUrjrk dsvfrfjDr lfg".kqrk] xzkg~~;'khyrk] lg&vfLrRo] mnkjrk] lejlrk dh Hkkouk] vkè;kfRedrk ,oaHkkSfrdrk dk leUo; rFkk vusdrk esa ,drk dk Hkko¼6½ Hkkjrh; laLÑfr dh ,slh fof'k"Vrk;sagSa ftl dkj.k Hkkjr ds fo'kky {ks= esa fdafpr HkkSxksfyd] Hkk"kkbZ o cfgjax thou 'kSyh esai``Fkdrk gksrs gq;s Hkh] gekjh jk"Vªh; ^fpRrh* ,d gSA Hkkjrh; laLÑfr dh blh vUrèkkZjk ds izR;sdHkkjrh; ds fpRr esa vUrZizokg dk dkj.k gS fd tgka dkykUrj esa fo'o dh dqN egku rFkkl'kDr dgh tkus okyh laLÑfr;ksa dk yksi gks x;k gS ogha Hkkjrh; laLÑfr dk vtL= izokglukru dky ls pyk vk jgk gSA ia- nhun;ky mikè;k; th us Hkh vius ,dkRe ekuorkoknesa ftl ,sfrgkfld rF; dk ladsr fn;k gS] og dfo bdcky dh bu iafDr;ksa ls HkyhHkkafrm)r gksrk gS&

^;wuku] feLkz vkSj jksek] lc feV x;s tgkWa ls] vc rd exj gS ckdh] ukeksfu'kkW a gekjkA

dqN ckr gS fd gLrh] feVrh ugha gekjh] lfn;ksa jgk gS nq'eu] nkSjs tekWa gekjkAA*¼7½

la{ksi esa] Hkkjrh; laLÑfr] ^lR;e~~&f'koe~~&lqUnje~~* dh f=vk;keh laLÑfr gSA fopkj ,oafopkjeaFku] Kku izkfIr gsrq izsfjr djrk gSA Kku dk euu] 'kks%èk izsfjr djrk gSA 'kksfèkr ,oaifj"Ñr Kku] foKku dk :Ik gksrk gSA foKku dks 'kk'or ^lR;* dgrs gSaA ewyr% foKkudY;k.kdkjh gksrk gSA mlds }kjk izÑfr esa fouk'kdkjh ewy rRoksa dh [kkst Hkh] muds ekuoek=ds fy;s vdY;k.kdkjh gksus dh psrkouh Lo:Ik gksrs gSaA vr% Lohdkjus ,oa ekuo thou esaviuk;s tkus okys lR;@foKku dk ^f'ko* dk dY;k.kdkjh gksuk LokHkkfod gSA tks dY;k.kdkjhgksrk gS] og ^lqUnj* Hkh gksrk gS] D;ksafd izÑfr ewyr% lqUnj gksrh gSA ekuo] izÑfr dh lqUnjreÑfr gSA vr% lkSUn;ZkuqHkwfr mlds ewy LoHkko esa gSA ;g dY;k.kdkjh lR;tfur lkSUn;ZkuqHkwfr]ekuoek= ds fpRr@vkRek dks lPps lq[k dh vuqHkwfr iznku djrh gSA O;f"Vxr ,dkRe ekuo]lEiw.kZ ekuork ds bl lq[k ds fy;s] èku ijk;.krk ds LFkku ij] èkeZijk;.krk lax vius drZO;ksadk ikyu djrs gq;s lef"Vxr ,dkRe ekuorkokn ds thou n'kZu dks pfjrkFkZ djrk gSA

vfèkHkkSfrd vFkkZr ekufld ,oa vkè;kfRed laLÑfr rFkk HkkSfrd laLÑfr vFkok lH;rk vFkkZr~f'k{kk] rduhd] laokn lapkj] HkkSfrd izxfr ds lkèku] cfgjax O;fDrxr ,oa lkekftd thoup;kZ]bu nksuksa dk fodkl lekukUrj ugha gksrk gSA okg~; lH;rk dh xfr] vH;Urj laLÑfr dh xfrdh vis{kk rhoz gksrh gSA fQj Hkh lH;rk dk fodkl] gekjh ewy laLÑfr ij gh fuHkZj djrkgSA lH;rk vkSj laLÑfr ds fodkl esa vlUrqyu vFkok vlkeUtL;] lkekftd fo?kVu dks tUensrk gSA vr% HkkSfrd laLÑfr@lH;rk esa vk;h foÑfr;ksa dks] iz;kliwoZd ifj"Ñr dj] iqu%


vfèkHkkSfrd laLÑfr ls lUrqyu fcBkuk gksrk gSA ia- nhun;ky mikè;k; dh lEiw.kZ fpUrk blhrF; dks ysdj Fkh fd Hkkjr dh nh?kZ eqxy ,oa vaxszth ijkèkhurk us igys eqxy vkdze.kdkfj;ksa}kjk cykr~ èkeZifjorZu ,oa dkykUrj eas fczfV'k 'kklu ds dky esa ik'pkR; f'k{kk iz.kkyh]O;olkf;drk] vfr HkkSfrd lq[k dh vkdka{kk o izn'kZu ls izHkkfor gks dj] gesa vkèkqfudrk dsuke ij ftl fons'kh lH;rk dk ekufld xqyke cuk fn;k] mlh dks ge viuh laLÑfr ekucSBs gSa vkSj geus viuh ewy laLÑfr dks foLe`r dj fn;k gSA¼8½ ik'pkR; HkkSfrd thou 'kSyh,oa lH;rk dk ;g vUèkkuqdj.k] gekjh mu HkkSxksfyd] uSlfxZd o vkè;kfRed lksp] fpUru ,oa^thou n'kZu* ls fHkUu gS] ftleas Hkkjrh; laLÑfr vUkUrdky ls iqf"ir&iYyfor gqbZ gSA if'peds vUèkkuqdj.k ls nq"izHkkfor vkèkqfudhÑr Hkkjrh; lH;rk] Hkkjrh; laLÑfr dk LokHkkfodifj.kke ugha gSA vr% bl vlUrqyu us Hkkjr esa reke ekufld] ckSf)d] vkfRed oHkkSfrd&vkfFkZd vLkUrqyu mRiUu dj fn;s gSaA ia- nhun;ky mikè;k; dk ,dkRe ekuorkokn]blh foÑfr dks lekIr dj iqu% gekjh Js"Bre Hkkjrh; laLÑfr] thou n'kZu ,oa rRo vkèkkfjrlH;rk ds iqufoZospu dk ,d lQy iz;kl gSA

,dkRe ekuo n'kZu ds vkèkkj esa fLFkr] ^lq[kL; ewya èkeZ%* lw= esa] ^lq[k* ,oa ^èkeZ* dh ewyHkwro izHkkoh èkkj.kkvksa ds] Hkkjrh; laLÑfr ,oa thou n'kZu rFkk ik'pkR; laLÑfr o thou n'kZuesa oSpkfjd o O;ogkfjd vUrj ds lw{e fo'ys"k.k ls gh ;g Li"V gks tk;sxk] fd orZeku jk"Vªh;o oSf'od ifjfLFkfr;ksa esa O;kIr fofHkUu foÑfr;ksa ds ewy esa] fdl izdkj Hkkjrh; ifjfLFkfr;ksads izfrdwy] vkèkkjghu ,oa folaxr vfr&ik'pkR;h;dj.k fufgr gSA vkSj dSls Hkkjrh; laLÑfrdh ekU;rkvksa o èkkj.kkvksa ij vkèkkfjr ,dkRe ekuorkokn] mu foÑfr;ska dk fujkdj.k dj]u dsoy Hkkjr vfirq lexz ekuork ds ije&lq[k ,oa oSf'od lEiUurk dk ,dek= fodYi gSA

,dkRe ekuorkokn dk èkeZ & ^olqèkSo dqVqEcdeAA*

Ika- nhun;ky mikè;k; th us èkeZ dh cM+h lVhd ifjHkk"kkk nh gSA muds vuqlkj ^èkeZ ,d cgqrO;kid fopkj gS tks lekt dks cuk, j[kus ds lHkh igyqvksa ls lEcfUèkr gSA èkeZ ds ewyfl)kUr lR; vkSj lkoZHkkSfed gksrs gSaA*¼9½ vFkkZr èkeZ dh èkkj.kk oSKkfud rF;ksa rFkk lR;ksa ijvkèkkfjr jgrh gSA ekuo èkeZ leLr izkf.k;ksa ds fy;s leku gksrk gSA ns'kdky ifjfLFkfr;ksa dsvuqlkj dsoy mldh ikyu uhfr o fdz;k esa fdafpr vUrj gks ldrk gSA lkèkkj.k 'kCnksa esaèkeZ dk vFkZ gS lnxq.kksa iwoZ ,slk lnkpj.k ftlds }kjk izR;sd izk.kh ekuork èkeZ ds izfr iw.kZ:is.k drZO;ijk;.k jgsA fdlh Hkh oLrq dk LokHkkfod xq.k mldk èkeZ dgykrk gSA ;Fkk i`Fohdk èkeZ l`tu] ok;q dk èkeZ lapj.k ,oa vfXu dk èkeZ izToyu gSA blh izdkj ekuo dkLokHkkfod èkeZ ekuork gSA osn dgrs gSa ^euqHkZo*¼10½ vFkkZr~ ekuo cuksA ^èkeZ* lR; ij vkèkkfjrgSA foKku Hkh lR; gksrk gSA foKku lkoZHkkSfed] lkoZdkfyd] loZxzkg~; o loksZi;ksxh gksrk gSAblh izdkj ekuo èkeZ dh izÑfr Hkh O;kid gksrh gSA èkeZ ds ewy fl)kUr o ewY;] lkoZHkkSfed]lkoZdkfyd lR; gksrs gSaA ijUrq mudh O;ogkfjdrk rkRdkfyd ifjfLFkfr;ksa ij fuHkZj djrh gSAvfèkdka'k ik'pkR; n'kZu rRdkyhu ifjfLFkfr;ksa dh izfrfdz;k ds dkj.k fopkj esa vk;k gSA



tcfd Hkkjrh; n'kZu ifjfLFkfr;ksa ls Lora=] vkèkkjHkwr rRoksa] tks loZdkfyd gSa] ij vkèkkfjrgSA¼11½

euqLe`fr esa èkeZ ds nl y{k.k of.kZr fd;s x;s gSa&^?k`fr% {kek neksLrs;a 'kkSpfefUnz; fuxzg%A?khfoZFkk lR;edzksèkks n'kda èkeZ y{k.keAA*¼12½ &vFkkZr~ èkS;Z] {kek] ne ¼la;e½] vLrs; ¼vpkS;Z½]'kqfPk ¼'kkSp vkUrfjd ifo=rk ,oa okg~; LoPNrk] bfUnz; foxzg] ?kh ¼cqf)½] fo|k] lR; ,oa vdzksèk;s èkeZ ds nl y{k.k gSaA Ikk'pkR; n'kZu esa Hkh ^xksYMu :y vkWQ ,fFkDl* ds uke ls ^,fFkd~~lvkQ jksflizksfLkVh* ¼Ethics of Reciprocity½ èkeZ ds lanHkZ esa Lohdkj fd;k x;k gS fd ekuo dkekuo ds lkFk O;ogkj ,slk gksuk pkfg;s] tSlk og Lo;a ds fy;s pkgrk gksA gekjs in~eiqjk.k¼13½esa dgk x;k gS ^Jw;rka èkeZloZLoa JqRok pkI;oèkk;Zrke~A vkReu% izfrdwykuh ijs"kkau lekpjsr*vFkkZr~ lquks èkeZ dk loZLo lkj ;gh gS fd tks vkpj.k Lo;a ds izfrdwy izrhr gks oSlk vkpj.knwljksa ds lkFk u djksA dksbZ Hkh ugha pkgrk fd mlds fgr 'kksf"kr gksa] mls fuÑ"V le>ktk;s] mlds fgr dh dher ij nwljk dksbZ viuk LokFkZ fl) djsA ijUrq ik'pkR; lH;rk}Sroknh èkkj.kk ds dkj.k] ,d ekuo dks nwljs ekuo ls i`Fkd ekudj pyrk gSA iwathifr Jfeddk 'kks"k.k] vfèkdkjksa dk guu djus esa ugah fgpdrk ;fn blls dfFkr vfèkdre ykHk dh izkfIrgksrh gSA mikè;k; th us if'pe esa gqbZ oSKkfud [kkstksa dks vLohÑr djus dh ckr dHkh ughadghA ij mudk ekuuk Fkk fd mudk vius ns'k&dky ifjfLFkfr ds vuqlkj] ekuoh; dY;k.kds mn~~ns'; ls gh mi;ksx djuk pkfg;sA HkLeklqj dh rjg viuk gh fouk'k djus ds fy;sughaA izfl) oSKkfud vkbUlVhu us dgk Fkk fd ^foKku iq#"k dks vifjfer 'kfDr rks ns nsrkgS ij og mldh cqf) dks fu;af=r ugha dj ldrkA euq"; dh cqf) dks fu;af=r dj mls lghfn'kk esa iz;qDr djus dh 'kfDr dsoy èkeZ esa gksrh gSA *foKku us ekuo dks cgqr dqN fl[kk;kgS] bl rF; ls bUdkj ugha fd;k tk ldrk gSA ijUrq bldk nwljk i{k Hkh gSA izfl)n'kZu'kkL=h Mk0 loZiYyh jkèkkÑ".ku us dgk Fkk fd ^geus i{kh dk rjg mM+uk lh[kk] geuseNyh dh rjg rSjuk lh[kk ij balku dh rjg thuk Hkwy x;sA*

Hkkjrh; laLÑfr eas èkeZ] HkkSfrd lUrqf"V dks Hkh egRo nsrk gSA nhun;ky th us viuh vFkZuhfresa _f"k xkSre ds bl 'yksd dk mYys[k fd;k gS fd ^;rks vH;qn;fu% Js;l flf)]l èkeZ%A*¼14½vFkkZr~ ftlls ykSfdd HkkSfrd mUufr gks rFkk ftlls ikjykSfdd vkè;kfRed vkfRed lq[k HkhizkIr gks ogh èkeZ gksrk gSA egkHkkjr ds d.kZ ioZ esa Hkh"e firkeg dgrs gSa fd ^èkkj.kk}èkeksZèkkj;fr iztk%A* vFkkZr~ og èkkj.kk tks èkkj.k ;ksX; gks vkSj tks lcdks èkkj.k dj lds og tksleLr iztktuksa ¼ekuo ek=½ dks ,d lkFk & laxfBr :Ik esa j[k lds] ogh èkeZ gSA ,dkReekuo n'kZu blh èkkj.kh; èkeZ dh O;k[;k djrk gSA ekuo ek= dk èkeZ gS fd og vius dksmu lHkh rRoksa] fopkjksa] laLFkkvksa ls tksM+s j[ks] ftudk mldks ekuo cukus eas izR;{k o vizR;{k;ksxnku gSA &^èkkj.kkr~ èkeZekgq%* vFkkZr~ èkkj.kk ls èkeZ gSA èkeZ dk dke gS èkkj.kk djuk rFkk'kjhj] eu] cqf) ds chp ,d esy fcBkukA¼15½ oSls gh ,d O;fDr vkSj vusd O;fDr dk] ifjokjdk] lekt dk foPkkj Hkh gSA ;g rkyesy ifjokj o lekt èkeZ gSA O;fDr vkSj jk"Vª ds eè;esy cSB lds] og jk"VªèkeZ gSA jk"Vª ds lkFk leLr ekuo lekt gSA jk"Vª ÅWapk mB tk;s vkSj


lkjk ekuo lekt dk uqdlku gks tk;s ;g Hkkouk Hkh visf{kr ugha gSA lekt dk Hkh 'kjhj]fnekx] cqf) o fpRr ¼vkRek½ gksrh gSA budk ,dkRe :Ik jk"Vª gksrk gSA¼16½ izÑfr ds lkFkHkh lkeatL; fcBkuk vko';d gSA okLro esa ,d O;fDr ds vUnj mlds 'kjhj èkkj.k ls ysdj]lEiw.kZ l`f"V rd ftrus Hkh fj'rs ¼vHkkSfrd ;k HkkSfrd½ vkrs gSa muds chp lkeatL; fcBkusdk dke èkeZ dk gSA ;gh ,dkReekuo èkeZ gSA

oSfnd laLÑfr ds vUrxZr bl ekuo èkeZ dk ifjikyu djus gsrq dqN fo'ks"k funsZ'kkkRed oO;ogkfjd O;oLFkk;sa fuèkkZfjr dh xbZ gSa] ftudk mYys[k mikè;k; th us vius ,dkRe ekuon'kZu ds oDRkO;ksa esa fd;k gSA O;fDr dh vk;q voLFkkuqlkj fodkl ds lkFk vkJe èkeZ vFkkZr~czg~ep;kZJe] x`gLFkkJe] okuizLFkkJe ,oa lU;klkJeA ;g O;oLFkk ekuo thou dh izkjfEHkdvk;q ls e`R;q i;ZUr thou&èkeZ dh O;OkLFkk gSA f'k'kq :Ik esa ekuo ds lkFk] mldk ifjokjmlds lkFk laxzfFkr gksrk gSA ^f'k'kq ds ykyu&ikyu] 'kkjhfjd fodkl] laLdkj] f'k{kk ,oa mldsiw.kZ f'kf{kr] dq'ky ;qok ekuo cuus rd og vius ifjokj ls loZLo izkIr djrk gSA voLFkkuqlkj;g mldk czg~ep;Z vkJe dky gSA bl voLFkk esa og ifjokj ls ykyu &iks"k.k laLdkj rFkkxq:dqy esa xq:tuksa ls f'k{kk] Kku] lkgp;Z] lewg&laLdkj] laxfBr gksdj dk;Z djus rFkkvuq'kklu o vkns'k ikyu lh[krk gSA rnqijkUr mls o.kZ fo'ks"k esa nhf{kr fd;k tkrk gSA

Lkekt leku laLÑfr ,oa lH;rk ds leku mn~ns';ksa ds lkFk ,d lewg gksrk gSA vko';d gSfd lekt O;oLFkk lapkyu gsrq ftrus Hkh izdkj ds vko';d dk;Z gSa] mUgsa lekt dh lHkhbdkb;ksa@O;fDr;ksa esa mudh cqf)] Kku] {kerk] dkS'ky ds vuqlkj forfjr fd;k tk;s rkfd oslekt o jk"Vª dks ;Fkk 'kfDr viuk loZJs"B ;ksxnku ns ldsA bl gsrq Hkkjrh; laLÑfr esao.kkZJe èkeZ dh O;oLFkk dh xbZ gSA Kkuhtu] 'kwjohj] mRiknd&O;oLkk;h&Ñ"kd o deZdkj¼dkjhxj] f'kYidkj lsokdehZ½A osnkss a esa bu deZ vkèkkfjr oxZ foHkktu dk dksbZ ukedj.k ughafd;k x;k gSA& ^o;eXus voZrk ok lqoh;a] czg~e.kk o fprus ;k tuk vfrA vLekad |qEuefèkiUPk Ñf"V;wPpk Lo.kZ 'kq'kqphr nq"Ve~AA*¼17½ & vFkkZr~ ge ekuo leqnk; esa loZJs"B cus@ mPpLrjh;@ Js"B ifo= izkIr èku lekt ds lHkh iUpksa ¼Kkuh] ijkdzeh] of.kd] deZdj] fu"kkn½es lw;Z dh rjg izdkf'kr gksA & ¼_Xosn ds iq:"k lwDr esa] tgka o.kksZ a ds izpfyr ukeksa dkmYys[k gS mu _pkvksa dks] ewy osn esa] iz{ksfir ;k ckn esa lfEefyr tkus dks fookn gS½A

o.kZ O;oLFkk tUeuk ugha FkhA vfirq ckY;dky ds mijkUr] xq:dqy esa czg~ep;Z vkJe eas izos'kdj f'k{kk nh{kk ds eè;] f'k"; dh tks izo`fRr] xq.k] dk;Z dkS'ky iznf'kZr gksrs Fks] f'k{kk iw.kZgksus ds mijkUr] xq:tu] f'k"; dks ml o.kZ esa nhf{kr djrs Fks ftl o.kZ@dk;Z gsrq] ogloZJs"B vkdfyr gksrk FkkA vr% o.kZèkeZ O;oLFkk deZ.kk ekuh xbZ gS] tUeuk ughaA ^tUeuktk;rs 'kwnzks] laLdkjs.k f}t mPp;rs*& vFkkZr~~ tUe ls izR;sd O;fDr 'kwnz&{kqnz vFkkZr~~ vKkkuhgkrk gS &nfyr ;k vifo= ughaA xq#dqy esa Kku izkIr dj laLdkfjr gksdj] funsZf'kr o.kZ esaog nwljk tUe&f}tUek gksrk gSA oSfnd laLÑfr dh ;g O;oLFkk Hkh oSfnd ekuo èkeZ dhlkekftd dk;Z foHkktu vFkok Je foHkkxtu dh ,d O;oLFkk gSA vr% izR;sd O;fDr dks



czg~ep;kZJe ds mijkUr] x`gLFkkJe vFkkZr deZ voLFkk esa vFkksZiktZu gsr]q ml o.kZ&deZ dkikyu djuk gh mldk èkeZ gksxk] ftlesa mls loZFkk ;ksX; ?kksf"kr dj] nhf{kr fd;k x;k gSA

Xk`gLFkkJe esa ;K&iwtu }kjk nso_.k] fo}ku ,oa xq:dqy laj{k.k }kjk xq:_.k] lUrkuksifRr}kjk fir`_.k] lUrku ,oa lgpjh rFkk o`) ifjokjtuksa ds ikyu iks"k.k }kjk ifjokj _.k]o.kkZuqlkj vius nkf;Ro dks iw.kZ dj lekt _.k] jkT; O;oLFkk esa dj vkfn ds Hkqxrku }kjkjkT; _.k rFkk jk"Vª dh laj{kkk] HkkoukRed ,drk] lejlrk] laLÑfr o laLdkj ds laj{k.k omUu;u }kjk jk"Vª _.k dks pqdkuk gksrk gSA ;s lHkh dk;Z ,d O;fDr ds }kjk] vius lHkhdk;ksZ a esa ,dkRe lUrqyu j[k djuk gksrk gSA blh dkj.k x`gLFkkJe dks lHkh vkJeksa dk fljekSjo T;s"B ekuk x;k gSA equLe`fr esa dgk x;k gS&^;Fkk unhunk% losZ lkxjs ;kfUr lkafLFkfre~ArFkSokJfe.k% losZ x`gLFks ;kfUr lkafLFkfre~AA ;Fkk ok;qa lekfJR; o™rUrs loZtUro%A rFkSokx`gLFekfJR; o™rUrs loZvkJe%AA*¼18½ ftl izdkj lHkh ufn;ka lkxj esa fLFkr gksrh gSa rFkk ok;qlHkh izkf.k;ksa esa izk.k dk lapkj djrh gS mlh izdkj x`gLFkkJe ds vkJ; ls gh lHkh vkJefLFkj gksrs gSaA lHkh vkJeksa dk ikyu x`gLFktuksa }kjk gksrk gSA O;fDr tUe ysrk gSA lektmls f'kf{kr] laLdkfjr] xq.koku ,oa Js"B cukrk gSA bl izdkj tc O;fDr l{ke gks tkrk gS]og vius deZ lekt dks vfiZr djrk gSA O;fDr o lekt eas vfoHkkT; lEcUèk gksrs gSaA os,d&nwljs ds ijLij iwjd o lgk;d gksrs gSaA¼19½ ;g x`gLFkkJe gh gS tgkaa W ekuo ^,dkReekuonkokn* èkeZ dk lE;d fuoZgu djrk gSA

x`gLFkkJe ds vius ikfjokfjd] lkekftd] jk"Vªh; ,oa ekuoh; mRrjnkf;Roksa dks iw.kZ djus gsrqvius ^vFkZ&iq#"kkFkZ* dks iw.kZ dj] ogvius loZLo lfgr] vius mRrjnkf;Ro Hkh] dze'k% viuhlarku dks lkSaidj nkf;Ro eqDr gksdj] okuizLFk ¼ou dh vksj izLFkku dh rS;kjh dh voLFkk½vkJe esa izos'k djrk gSA bl le; mlus tks dqN Hkh lekt jk"Vª ls izkIr fd;k gSA og viukloZLo dze'k% mls gh lkSairk gSA ^rsu R;Drsu HkqUthFkk ek x`èk% dL;fLon~èkue~A*¼20½ &;g èkulEifRr ,'o;Z fdldk gSA lc dqN bZ'k dk gS esjk ugha gSA mlds }kjk ifjR;Dr dk gh eSaHkksx djrk gWa wA vr% ^bna jk"Vªk;] bna u&eeA* vr% tks Hkh lekt@jk"Vª dk gS] esjk ugha gS]og eSa mlh dks lkSairk gSA ,slk dj dze'k% lU;klkJe voLFkk esa ou xeu@izÑfr ds lkfUuè;esa jgdj] mu izkÑfrd iaprRoksa & f{kfr] ty] ikod] xxu] lehjk& esa foyhu gksdj izÑfrdh bu nSoh; 'kfDr;ksa ds _.k ls m_.k gks tkrk gSA ;gh tUe ls e`R;qi;ZUr] &^,dkRe ekuo*dk èkeZ gSA Jh osnO;kl th us dgk gS&^èkekZnFkZ'p dke'p l fdeFkZs u lsO;rsAA*¼21½ vFkkZr~~]ftl èkeZ ls gh vFkZ vkSj dke dh fl)h gksrh gS] ml èkeZ dk lsou D;ksa ugh djrsA

gekjs fy;s leLr l`f"V&lef"V] ôlqèkSo dqVqEcde*&,d dqVqEc gSA gekjh laLÑfr esa lef"V :Ikifjokj dk vkèkkj I;kj gS tcfd ik'pkR; lH;rk ds lef"V :i cktkj dk vkèkkj O;kikj gSAtgka îfjokj* gksrk gS] ogka Î;kj* gksrk gSA tgkWa ^cktkj* gksrk gS] ogkW a Ô;kikj* gksrk gSA¼22½;gh dkj.k gS fd Hkkjrh; laLÑfr rFkk ik'pkR; lH;rk esa larqyu lEHko ugha gSA vkèkqfudHkkjr esa iui jgh ekufld o pkfjf=d foÑfr;ksa] foHkktudkjh izo`fRr;ksa dk dkj.k Hkh ;ghgSA fdlh ns'k dh lH;rk dk ewY;kadu mlds lkaLÑfrd ewY;kas ds ekin.M ij fd;k tkrk


gSA ;fn muesa vlUrqyu mRiUu gks tk;s rks fo'ks"k iz;kl djds gh lUrqyu LFkkfir djukiM+rk gSA Hkkjrh; lkaLÑfrd thou ewY;ksa ij vkèkkfjr] ia- nhun;ky mikè;k; th dk ^,dkReekuorkokn* ;gh iz;kl gSA lef"V ds fodkl ds dsUnz esa ^ekuo* }kjk thou ds lHkh i{kksa dsizfr] vkLFkkuqlkj] {kerkuqlkj ,oa èkekZuqlkj drZO;ijk;.krk dk ikyu djrk gqvk] vius iq:"kkFkZvFkkZr~~ iq:"k&vFkZ dks lEiUu djrk gSA ;gh mldh ,dkRerk gSA

,dkRe ekuorkokn dk ^lq[k*&^losZ HkoUrq lqf[ku%] losZ lUrq fujke;kAA*

euq"; dh lHkh fdz;kvksa dk mn~ns'; ,d gh gS & vkuUn ,oa lq[k dh izkfIrA vkgkj] funzk]Hk;] eSFkqu vkfn ls tks vuqdwy vuqHkwfr gksrh gS] mls bfUnz; tfur lq[k dgrs gSaA ;g euq";vkSj Ik'kq esa leku ik;k tkus okyk lq[k gSA ;g {kf.kd gksrk gSA ijUrq euq"; vkSj iq'k esa,d vUrj gksrk gSA euq"; dk dqN u dqN thou y{; gksrk gSA euq"; ds y{; dk fuèkkZj.kHkkSfrd lq[k ds vfrfjDr] mldh cqf)] Hkkouk rFkk vkRek ds lq[k ls gksrk gSA bl izdkj 'kjhj]eu] cqf)] vkRek pkjksa izdkj ds lq[k dh izkfIr gh thou dk Yk{; gksrk gSA bl y{; dhizkfIr vdsys lEHko ugha gSA ;s pkjksa izdkj ds lq[k ijLij rknkRE; ls ijelq[k dh izkfIr dsy{; dh iwfrZ djrs gSaA blds fy;s lkekftd Lrj ij ijLij fuHkZjrk vko';d gSA blfy;slq[k dk vkèkkj ijLijkuqdwyrk gSA¼23½

Ikk'pkR; laLÑfr ghxy ds HkkSfrdoknh }Srokn ¼Materialistic Dualism½ ij vkèkkfjr gSA }Sr ls}Un mRiUu gksrk gSA ik'pkR; n'kZu blh }Un@la?k"kZ dks thou dk fodkl ekurk gSA ;gn'kZu O;f"V ls lef"V] lef"V ls ijesf"V] lkè; ls lkèku] èku ls èku&èkkjd] drkZ ls deZ]deZ ls dkjd] lH;rk ls laLÑfr dks i`Fkd ekurk gSA ik'pkR; laLÑfr dh èkkj.kk gS fdvfLrRo ds fy;s la?k"kZ (struggle for existence) vko';d gSA vr% Lo&vfLrRo ds fy;s nwljksadk vfLrRo feVkuk vFkok ml ij cykr~~ gkoh gksuk mfpr gSA ;su dsu izdkjs.k vfèkd LokFkZdh iwfrZ] ik'pkr; laLÑfr dk èkeZ gSA izR;sd Lrj ij opZLo dh ;g ftftIlk] fo'o dksdHkh;qèn foHkhf"kdk] dHkh vkfFkZd ijkHko vkSj dHkh vkfFkZd o jktuSfrd lkezkT; ds vekuoh;'kks"k.k o neu esa cykr~ èkdsyus yxh gSA blh opZLo ds fy;s] mRrj dksfj;k o vejhdk dhfouk'kdkjh ijek.kq 'kfDr dh izfr;ksfxrk ds pyrss] fo'o rhljs egk;q) dh dxkj ij [kM+k gksx;k gSA phu vius opZLo ds fy;s] fodkl ds uke ij] vU; jk"Vªks a esa vkfFkZd lkezkT; ds lgkjs]mudh lEizHkqrk dks [kafMr djus dks rRij fn[k jgk gSA¼24½ blh }Sroknh HkkSfrd laLÑfr usiwathoknh vFkZO;oLFkk dks tUe nsdj] ^èku* dks gh lq[k dk ewy eku fy;k gSA èku ls gh èkudh iwfrZ] èku ds ewy esa gSA ekuoh; laosnuk;sa o ekuo dY;k.k lHkh dqN èku ds ekin.Mksaij ekik tkus yxk gSA Hkkjrh; vkè;kReoknh laLÑfr ds Bhd foijhr] ik'pkR; HkkSfrdoknhlaLÑfr esa ^lq[kL; ewya vFkZ%A vFkZL; ewYke vFkZ%AA* vFkkZr~ lq[k dk ewy vFkZ&èku gh gS rFkkvFkZ dk ewy Hkh vFkZ gh gS] pfjrkFkZ gk jgk gSA

blds foijhr Hkkjrh; laLÑfr dk vkèkkj v}Srokn ¼non-dualism / Oneness½ gSA vFkkZr~ tks dqNHkh HkkSfrd&vHkkSfrd] tM+&psru] n`';&vn`'; vuqHkwfr gS] og i`Fkd&i``Fkd ugha gSA lc dqN



,d gh gS] ,d gh esa fufgr gSA ^vge~ czg~ekfLe*&eSa gh czg~e gWa w] Hkkjrh; oSfnd laLÑfr dkegkea= gSA ^izKkua czg~~e*&izxV Kku gh czg~e gSA ^loZe~~ [kfYona czg~e*& loZ= gh czg~e gS D;ksafdlHkh esa vkRek fo|eku gSA ^ÅWa rRoefl*&og czg~~e rRoLo;a rqEgha gksA¼25½ vr% vius vkfRedlq[k&vkRek ds lq[k ds fy;s tks Hkh fd;k tk;s] eSa gh mldk drkZ gWa w] eSa gh mldk deZ gWa w]eSa gh mldk dkjd gWaw] eSa gh mldk y{; gWawA rc fQj la?k"kZ dSlkA tc }Sr gh ugha rks }UndSlkA ;g drkZ&deZ&fØ;k dh ,dkRerk gSA ;gh lkèku o lkè; dh ,dkRerk gSA ;g,dkReokn O;kf"V&ekuo dks Øe'k% ifjokj] NksVs lewgksa] lekt] jk"Vª] fo'o] lekf"V rFkkijes"Vh ls vkc) j[krk gSA ,d gh ekuo O;f"V :Ik esa] vius loZi{kh; drZO;ksa dh iwfrZ djrkgqvk] lekt lewg dk vax cudj lef"V dY;k.k dk;Z esa jr jgrk gSA fofHkUu lewg :Ik esaifjokj] lekt] jk"Vª o lekf"V ds fofHkUu {ks=ksa esa fd;s x;s dk;Z&uhfr&jhfr Hkh] bl O;kf"Vds dY;k.k o dk;Z'khyrk dks iz'kLr djrh jgrh gSA tc O;f"V vkSj lef"V ijLij fuHkZj] ,d& nwljs ds iwjd lkèku Hkh gSa rFkk lkè; Hkh gSa rks fofHkUu O;fDr bdkb;ksa esa leHkko] ijLijlkeatL; ,oa lg&vfLrRo ls gh ekuork dk fodkl gksxkA blds foijhr }Srokn vkèkkfjrik'pkR; laLÑfr esa] ekuo&O;f"V dsUnz esa vo'; gS ij og ,d J`a[kyk:Ik vkc) gksrk gqvklef"V ds LkkFk lEc) ugaha gSA ogkW a lef"V fgr O;f"V fgr ls i`Fkd gSA tks vfèkd lkèkulEiUu] 'kfDr lEiUu gSa og vius ls de lEiUu ij izHkqRo ds fy;s izR;u'khy jgrk gSAik'pkR; fodkl] viw.kZ izfr;ksfxrk dh cktkjoknh vFkZO;oLFkk ij vkèkkfjr gSa tgka eRL;U;k;&cM+h eNyh NksVh eNyh dks [kk tkrh gS&ij fuHkZj gksrk gSA ogka leku ifjfLFkfr;ksa esaleku U;wure ykxr o leku U;wure ewY;] vFkkZr~~ vfèkdre dY;k.ktud iw.kZ izfr;ksfxrk dhifjdYiuk vo'; dh xbZ gS] ijUrq ^,slk O;ogkfjdr% lEHko ugha* gS] ds ifj.kke ds lkFkA

ekuo ds lEcUèk esa gekjh n`f"V lexzrkoknh ,oa ,dkRerkoknh jgh gSA og ,dkaxh u gksdjlokZaxh.k gSA HkkSfrd rFkk vkè;kfRed dk leUo; euq"; ds 'kjhj] eu] cqf) vkSj vkRek ds chpikjLifjd lkeUtL; iuirk gSA gekjh lEiw.kZ O;oLFkk dk dsUnz ekuo gksuk pkfg;sA HkkSfrdmidj.k ekuo ds lq[k ds lkèku gSa] lkè; ughaA ekuorkokn ;k ,dkReokn vFkok ,dkReekuorkokn ds vkèkkj ij gesa lEiw.kZ O;oLFkk dk fodkl djuk gksxkA ,dkRe ekuo vusd,dkRe lef"V;ksa dk ,d lkFk izfrfufèkRo djus dh {kerk j[krk gSA¼26½ ijUrq mlds fy;svko';d gS fd'kjhj] eu] cqf)] ,oa vkRek dk leqPp; gksA bu pkjksa dk lq[k gh euq"; dklq[k gSA¼27½ tc vFkZ rFkk dke] èkeZ ds fu;eksa@ èkekZpj.k@ èkeZ ¼O;kid vFkksZ a esa½ ds fl)kUrksals iw.kZ fd;s tkrs gSa rc okLrfod lq[k dh izkfIr gksrh gSA¼28½ Hkkjrh; oSfnd laLÑfr esa lq[kdk ekunaM] dsoy vfèkdre futh HkkSfrd larqf"V ugha gS vfirq] leLr ekuo leqnk; gsrq loZLoleHkko] leku lkèku] leku mn~ns';] leku fopkj dh èkkj.kk ij vkèkkfjr lq[k] 'kkafr ,oaijLij leHkko gSA _Xosn esa dgk x;k gS&^^laxPNèoa la onèoa la oks eukafl tkurke~~A--------lekukseU=% lfefr% lekuh lekuaeu% lgfpRres"kke~A lekua eU=efHk eU=;s o% lekusu oks gfo"kktqgksfeAA lekuh o vkdwfr% lekuk g`n;kfu o%A lekueLrq oks euks ;Fkk o% lqlgklfrA**&_Xosn¼29½&vFkkZr~] lHkh laxfBr jgsaA lHkh ds fopkj] xks"Bh] eu] fpRr] iz;kl] R;kx] lkèku] g`n; leku


gkas sA lHkh leku :Ik ls g"kZiwoZd lUrqf"V o lq[k izkIr djsaA lHkh ds ladYi leku gksaA lHkhlaxfBr gksdj lHkh ladYi iwjs djsaA Hkkjrh; laLÑfr dh bl Hkkouk] fd iwjh l``f"V esa ^loZa[kfYona czg~e* ogh czg~e&vkRek fo|eku gS] tks eq>esa gS] ds dkj.k] ge lnSo lcds vFkZkr~~&fo'odY;k.k dh dkeuk djrs gSaA lHkh lq[k ls jgsaA lHkh fujkin jgsaA loZ= eaxy gh eaxy gksAfdlh dks Hkh nq%[k u gksA ;gh czg~ekU.kh; ,dkReokn gSA blh dk O;f"V:Ik ia- nhun;ky thdk ^,dkRe ekuookn* rFkk lef"V:Ik ^,dkRe ekuorkokn* gSA

^loZs HkoUrq lqf[ku%] loZs lUrq fujke;k%AAlosZ Hknzkf.k Ik';UrqA ek df'pn~~ nq%[k HkkXHkosr~~AA*

lanHkZ1- mikè;k;] ia0 nhun;ky] ^,dkRe ekuookn* tkx`fr] izdk'ku uks,Mk] uoe~~] laLdj.k 2008 ¼izFke

laLdj.k 1968½A

2- mikè;k;] ia0 nhun;ky & ^Hkkjrh; vFkZuhfr & fodkl dh ,d fn'kk*] jk"Vªh;] izdk'ku fy0]y[kuÅ & 1958] i0 8A

3- 'kkL=h] izks0 mn;ohj] ^dksVyh; vFkZ'kkL=*] laLÑr iqLrdky;] ykgkSj 1925A

4- jkekorkj fo|kHkkLdj & pk.kD; lw=kf.k] 27&28] Lokè;k; eaMy] ikjMh 1946A

5- www.hi.m.wikipedia.org>laLÑfrA

6- Ika0 Jhjke 'kekZ] vkpk;Z] ^Hkkjrh; laLÑfr ds vkèkkjHkwr rRo & Hkwfedk [k.M] www.literature.awgp.org>books

7- vxzoky] izks0 Jhjke ^,dkRe ekuo n'kZu dk vuq'khyu* nSfud tkxj.k] >kW alh] 23 flrEcj 2017]i`0 8A

8- 'kekZ] Mk0 ewypUnz ¼l0½] nhun;ky mikè;k;] lEiw.kZ okM~e;]& mikè;k;] nhun;ky ^,dkReekuooknO;k[;kuekyk] [k.M 12] i0 39&100] izHkkr izdk'ku] 2016&17A

9- ia0 nhun;ky mikè;k;] vueksy fopkjA www.behtarlife.com

10- _Xosn&10&53&6] ia0 Jhjke 'kekZ] vkpk;Z]&la0&_Xosn lafgrk] [kaM&4] izks0&;qxfuekZ.k ;kstukfoLrkj V``LV] eFkqjk] 2014A

11- <saxM+h] nRrksiUr( ^Pt. Deendayal Upadhyay- An Inquest* i0 86&88@101 lq:fp] izdk'ku] ubZ fnYyh& 1991A

12- euqLe`fr& 6&92] f}osnh] ia0 fxfjtkfd'kksj] ekuoèkeZ 'kkL=] uoy fd'kksj] izsl] 1917A

13- in~eiqjk.k] 'k`f"V & 19@357&358A

14- nhun;ky mikè;k;] vFkZuhfr] ogh i"B 8A

15- 'kekZ] Mk0 ewypUnz ¼l0½ nhun;ky mikè;k;] lEiw.kZ okM~e;] ogh [k.M 10] i`0 296&300A

16- usus] oh0oh0 ^Pt. Deendayal Upadhyay- Integral Humanism' lq:fp] izdk'ku] fnYyh] 2016] i0 4&5A

17- _xosn& 2&3&10] ia0 Jhjke 'kekZ] vkpk;Z] ogh] [kaM 1A

18- euqLe``fr& 6@90] egf"kZ n;kuUn] lR;kFkZ izdk'k] leqP;; 4 esa mfYyf[krA

19- 'kekZ] Mk0 ewypUnz] ^jk"Vª thou dh ,d fn'kk* lEiw.kZ okM~e;] ogh] [kaM 15] i``"B 54&55A

20- bZ'kkokL;ksifu"kn&1] 'kekZ] ia0 Jhjke] 108 mifu"kn] Kku[kaM] i``0 34] iz0&ogh] 2010A

21- osnO;kl@[email protected] ioZ@5&62A



22- lq"kek Lojkt ^lkmFk ,twds'ku VªLV* esa vius lEeku lekjksg ij fn;s x;s] oDRkO; lsA

23- mikè;k;] ia0 nhun;ky( ^jk"Vª thou dh ,d fn'kk* lEiw.kZ okM~Xe;] ogh] [k.M 15 i0 1 ls6A

24- vxzoky] Jhjke] ^,dkRe ekuo n'kZu dh izklafxdrk* fgUnh foosd ekfld if=dk] eqEcbZ] nhikoyhfo'ks"kkad] vDVwcj 2017] i"B 38( ,oa ^,dkRe ekuo n'kZu dh orZeku izklafxdrk ,oa nSfudtkxj.k] fnukad 25 flrEcj 2017 i`"B 8 ¼nhun;ky tUe'krh o"kZ esa fo'ks"k vk;ksftr laxks"Bhfnukad 23 flrEcj 2017 esa eq[; oDrk ds :Ik esa ^,dkReekuorkokn dh loZdkyhu izklafxdrk*ij eq[; oDrO; ij vkèkkfjr½A

25- ^czg~~e jgL;&Ñ".k ;tqosZnh; 'kqdjgL;ksifu"knA

26- mikè;k;] nhun;ky] lEiw.kZ okM~e;] ogh [k.M 12 i`"B 28&30A

27- mikè;k; nhun;ky] lEiw.kZ okM~e;] ogh [k.M&11 i`"B 196A

28- usus] oh0oh0] ogh] i`0 4&5A

29- _xosn&10&191&2]3]4] ia0 Jhjke 'kekZ] vkpk;Z] ogh] [kaM&4A


Patterns of Development

Ajit Kumar SinghAPH Publishing Corporation, New Delhi, 2018

In a continent sized country like India with a population of 1.3 billion, theissue of regional imbalances acquires special significance. In a poverty riddenunder developed economy, the challenges of spatial development become allthe more important before the planners and political leadership. In the postIndependence period, in spite of various policy initiatives taken by the centraland state governments, regional disparities have continued to persist. Theissue of regional imbalances in India, though important, all the while remainedin the backyard of development agenda which started since planning beganin 1951.The present book is an outcome of the ICSSR project conducted by the authorduring the period 2013-15 and covers a period of 1951 to 2011. It examinesthe development levels of states in terms of multiple indicators of developmentas against earlier studies on the subject, which mainly concentrated on thetrends in growth rates and convergence of the levels of per capita income. Inthe book, two dimensions of development have been considered: one dealingwith the levels of economic development and two dealing with the levels ofliving. The discussion covers two sub periods, the planning era (1951-1991)and the post liberalization era (1991-2011).The book contains 8 chapters. Starting from the Historical Roots of RegionalImbalances in India in chapter 1, it moves to Regional Structure of IndianEconomy at the time of Independence in chapter 2. Chapters 3 and 4 dealwith spatial structure of the Indian economy during planning and postliberalization periods respectively. Chapters 5 and 6 deal with quality of lifeand levels of living in the above said two periods. Chapter 7 analyses publicexpenditure, central transfers and regional imbalances. The final chaptercontains the conclusions of the study. It is a book with 220 pages of analysis,followed by exhaustive references and vast data in 68 Appendix tables.The study traces the historical roots of regional imbalances in India in thedistorted and uneven pattern of regional development during the prolongedperiod of colonial subjugation under the British Rule.

BOOK REVIEW—1



The land revenue system, uneven pattern of public investment (in canal andirrigation etc.), enclave type of development in selected areas, availability oflocal entrepreneurship, and geographical factors and resource endowments ofdifferent regions are cited as factors responsible for the pattern. Major part ofland was under Zamindari (57 per cent) and Ryotwari (38 per cent) systems.It is argued by many authors that the regions under Zamindari system (Bengal,Bihar Odisha, parts of Central Provinces and some parts of Madras residency)were subject to higher exploitation and did not provide for incentives forinvestment and agricultural growth. However, the book suggests that statisticaldata do not support the view of these researchers. In the coastal areas inBengal, Madras, Bombay, several factors contributed to the concentration ofmodern industry and finance. It has been observed that in the coastal areasthere was a marked shift away from agriculture. The expansion of railwaysystem in second half of the 19th century widened the possibilities of developmentof some coastal areas. The growth of metropolitan centers of Bombay, Calcuttaand Madras did not lead to development of hinterland in the absence ofspread effects.The distorted and uneven pattern of regional development which India inheritedfrom the British has continued to shape the pattern of development in thepost Independence period due to their initial advantages.The book having a thorough analysis of development patterns and levels ofliving and quality of life in pre- and postliberalization periods also examinesthe role of public expenditure on development levels in the states. It showsthat the differences in the fiscal capacity of the states lie at the root of thepersistent regional disparities.The merit of the book lies in the rich data base which has been presented inthe form of various tables and charts in each and every chapter. The analysisis rigorous and the literary presentation, of high order.The book may be useful for researchers and policy makers.

Dr. I.D. GuptaFormer Professor of Economics,

Lucknow University, Lucknow, U.P.


A World of Three Zeros

Author of the Book: Muhammad YunusName of the Publisher: Hachette Book Publishing India Pvt. Ltd

Year of Publication: 2017ISBN: 978-93-5195-205-3

In marketing, the ‘power of three’ generally offer customers a small selectionof strong choices which enables them to choose the best option. But MuhammadYunus’s “A world of Three Zeros” gives us three indicators i.e. poverty,unemployment and net carbon emissions which are intricately linked to eachother and have the potential to transform the world. This book is an analyticalaffirmation of how human rights and economic growth are imperative andfundamental to each other’s existence. It becomes a quintessential readingfrom the Indian context because India is at a juncture where we are trying totransform ourselves from a market of job seekers to a market of job creators.We are also living in a time where our banking systems are facing a deleterioussituation owing to piling bad loans and financial crimes.Dr. Yunus extricated millions of people out of poverty in Bangladesh throughhis microcredit model which is posited as a counterbalance to the conventionalbanking system. His initiative comes across as a game-changer in the bankingsystem where focus shifts from making the rich people richer to empoweringpoor people (especially the underprivileged women). The author places hisfirm belief in the diligence and creditworthiness of the most marginalizedsections that “can be trusted to repay their loans at a higher rate than mostrich borrowers”. The human spirit which is indomitable should never be madesubservient to the notions of charitable gifts in the form of social responsibilityand community service. Dr. Yunus calls for the creation of a new economicdesign of “social business”, a new form of enterprise based on selflessness. Heexplicitly makes his point that those at the lowest rung of the social ladderneed an opportunity, not philanthropy, to unleash their creative potential.Dr. Yunus opines that there is an urgent need to redesign the economicsystem in such a way that Sustainable Development Goals (SDGs) are notonly but will also be able to sustain in the long run. He expresses his confidence

BOOK REVIEW—2



that if all the countries work collectively on the lines of “social business” thenthe problems of poverty, unemployment and net carbon emissions can bebrought down to zero level. Holding responsible the present model of development(the traditional vision of capitalism) for concentration of immense wealth inthe hands of a few, which has resulted in gross inequalities, a growing senseof distrust, deep social unrest and political polarization, Dr. Yunus projectshis model as the ‘utopic’ response to all inequities. It has been very effectivelybrought out through his personal experiences in Bangladesh that how, inorder to solve one serious problem of the poor, many other problems were alsoresolved. The socially conscious entrepreneurship developed many self-sustainingbusinesses which redirected the profits back in the market instead of enrichingthe investors.This book highlights how the idea of personal profit-making is based on theflawed acceptance of “an invisible hand” that purportedly promotes competition,brings equilibrium in the market and generates social benefits. This is not tosay that the author has discredited capitalism, which in common parlance,has come to be understood in terms of individual selfishness rather thanfreedom of making a choice. This falsification has indeed come to shape thehuman ambition. He wants people to fend for themselves and take advantageof this hybrid system which is sometimes motivated by profit and sometimesby an all-inclusive economy. What he proposes is to give a human angle tothe economic models, where human beings are not just ruled by selfishnessbut find profound satisfaction in selfless actions.In this book, Dr. Yunus posits his faith in the youth who are “willing to beuseful to others” and are well-equipped to embark upon any task, thanks tothe overhauling technological developments which have expanded their horizonslike never before. The education that is imparted to the young minds shouldfocus more towards enhancing their entrepreneurial skills rather than justdeveloping their cognitive skills which nurture them to become only fit employees.The initiatives like adding social business courses to the academic programshave already been taken up by many universities but these need to be promotedacross the globe.Apart from zeroing poverty and unemployment, the author traces a trajectorytowards achieving the goal of zero net carbon emissions, especially in developingcountries like India and China. Due to breakthroughs in clean technologies,we are no longer saddled with unsustainable technologies. The new energymodel dedicated to social goals will lead to environmentally sustainablebusinesses but this would seek international solidarity, which may be animplausible task. “A world of Three Zeros” has come up with many examplesto show how small initiatives like Grameen Bank can lead to big changes butthe challenge is how far-reaching these changes can be—would they be able


to accommodate the demands of a $78 trillion economy? Another problem thatmay hinder the realization of Dr. Yunus’s dream project is that many countrieshave obscure regulations regarding microfinancing rendered by charities ornon-governmental organisations. Nevertheless, he presents an optimistic futurewhere the citizens and governments together will share the outlook to transformthe world.Amidst all the ordeals posed by Dr. Yunus’s social business model, his thoughtsemerge as a whiff of fresh air in an otherwise claustrophobic system whichoperates on profit pressures. This book is a provocative reading, where Dr.Yunus emerges as a hero who passionately and persistently endeavours tosolve the world problems with his new thoughts and ventures to “create anew civilization based not on greed but on the full range of human values”.

Dr. Masroor Ahmad BegPrincipal

Zakir Husain Delhi College (Evening)University of Delhi

A World of Three Zeros


Uttar Pradesh Uttarakhand Economic Association(UPUEA)

Report, 13th Annual Conference held on 14th - 15th October, 2017Department of Economics, Banking and FinanceBundelkhand University, Jhansi (Uttar Pradesh)

R.P. Juyal*

Pre conference Activities: 13th October, 2017:On 13th October 2018, a workshop on “how to write a Research paper” wasorganized in the Department of Economics and Finance of BundelkhandUniversity, Jhansi. Professor Jagdish Narayan of Allahabad University wasthe chairperson of the workshop. Professor Ashok Mittal, Aligarh MuslimUniversity (AMU) convened the workshop. Professor S.K. Mishra, Pt. DeenDayal Upadhyay Chair, BHU presented outlines of the workshop. ProfessorM.L. Maurya delivered the inaugural address. Professor C.B. Singh introducedthe distinguished guests to the participants and welcomed them all.After the inaugurals session, the first technical session was devoted to Selectionof Research Problem. Professor V.P. Tripathi, Agra University explainedthe process of delineating a research problem. Dr. A.K. Tomar, (former Principal)chaired the session. The second technical session focused on Data Managementand Analysis. Professor S.P. Singh, IIT, Roorkee and Dr. Alok Kumar, BHUdiscussed how to use various software to handle the problem of data managementand use select relevant statistical tools to draw meaningful inference andquantify the results. This session was chaired by Professor S.R. Aggarwal thefounder Head of the Department of Economics and Finance and Pro- ViceChancellor, Bundelkhand University.The Third Technical Session was devoted to Application of MathematicalTools. Dr. Hansa Jain of SPIER, Ahmadabad, elaborately discussed varioustools and explained where and how to use them. This session was chaired byProfessor G.M. Dubey, Head, Department of Economics, Dr. H.S. Gaur University,Sagar, M.P.

* NAS College, Meerut, U.P.



Fourth and the last Technical Session was designed to discuss the Appliedand day to day Issues in Research Projects. Professor M.A. Bag, DelhiUniversity and Dr. Dimpal Vij shared their experiences in this regard –specially, how to apply for a research project, conduct field survey, collectdata, cite references, prepare Index, select right journal or publishers etc. andsuggested various alternative solutions. They also suggested that one researchproject can generate more than one research papers. This session was chairedby Professor Jagdish Narayan. Professor Narayan discussed in detail how tomake research relevant to address a persisting or emerging issue. His emphasiswas on balancing intellectual curiosity and practical utility.Professor A.K. Mittal detailed out the procedure and process of publicationand thanked all the distinguished resource persons and participants.Dr. Ira Tewari, Associate Professor of Department of Economics and Financeof Bundelkhand University, conducted the proceedings of the workshop.

Conference ProceedingsDay 1, 14th October 2017

Inaugural SessionProfessor N.K. Taneja, Honourbale Vice Chancellor, Chaudhary Charan SinghUniversity (CCS) Meerut was the President of the 13th Annual Conference ofUttar Pradesh, Uttarakhand Economic Association (UPUEA). The inauguralsession of the 13th Annual Conference was held in the Gandhi AuditoriumBundelkhand University, Jhansi. The inaugural session of the conference waschaired by Professor Surendra Dubey, Honourbale Vice Chancellor, BundelkhandUniversity, Jhansi.In this conference, acknowledging the contribution in furthering research andteaching in Economics and promoting teaching learning of Economics in Indiaand specially in Uttar Pradesh and Uttarakhand, the UPUEA conferred the12th Kautilya Award on Professor Manoj Pant, Director, Indian Institute ofForeign Trade. Professor Pant on acceptance of the award, expressed gratitudeto the UPUEA and assured the participants of the conference that he willcontinue to endeaour to promote teaching – learning and research in Economics.After award ceremony – Professor Ravi Srivastva, President UPUEA, in hisaddress detailed out the aims and objectives of UPUEA and the attemptsmade by the association in the last 13 years to promote teaching learning andresearch in Economics, especially in imparting the research skills in the youngteachers and research scholars.Professor Rajendra Prasad, Honourable Vice Chancellor, Allahabad StateUniversity in his inaugural address mentioned that all the issues and concernsof human development developed are now part and parcel of economic analysis.This has increased complexity of the discipline and challenges and therefore

Report, 13th Annual Conference held on 14th-15th October, 2017


economic policy and programmes tend to be multidimensional. He said theeconomics and politics has to be SMART (Specific, Manageable, Attainable,Relevant and Time Bound).Conference President Professor N.K. Tanjea in his address mentioned thatdemonetization and introduction of Goods and Service Tax (GST) intends tomake economy free from corruption, hassle free and bring all those who arecapable in the tax net and thereby will strengthen the economy. He said thereorganization and restructuring of Banks will further enhance the effectivenessof the national economy.Professor Surnedra Dubey, chairperson of the session in his concluding remarkurged the participant to come out with the ways and means to eradicate thepersisting inequalities in Indian Economy. He was also of the view that weneed to change the economics of loan to economics of saving. He said, had wefollowed the path of development shown by Pt. Deen Dayal Upahadyay, wewould never witnessed the hapless and helpless person like Dana Majhi, atribal person of Odisha, carrying the corpse (dead body of) his wife on shouldersall alone for about 10 kilometers – because he did not have the capacity tohire a vehicle.After the inaugural session, the participants deliberated and presented papersin different technical sessions. In the evening a cultural evening was organized,in cultural heritage of Bundelkhand was show case through songs and dances.The cultural evening was inaugurated by Shri Hargovind Kushwaha, HonourableMinister, and Government of Uttar Pradesh.

Technical Session–IThe Emerging Contours of Centre State Fiscal Relation in India

Chairperson: Professor D.K. Madaan, Head, Department of Social Science,Punjabi University, Patiala.Co-Chairperson: Dr. Dimpal Vij, Department of Economics, MMH College,Ghaziabad.Thirty papers were scheduled for presentation in this session. The papers infull length have been published in the conference volume. Because of largenumber of papers parallel sessions were organized for presentation of papersimportant papers presented in the session are summarized below:Akansha Awashi presented the paper titled “An insight into Goods andService Tax in India (GST)”. Based on data –culled from authentic governmentpublication she analyzed the role of state and central governments inimplementation of GST. She argued that GST is a decisive step in the directionof realizing the dream of one nation – one market. This tax will result inrevenue gain both for states and centre – by widening tax net and improving


tax compliance. She argued that there is great need of educating tax experts,entrepreneurs and general public at large about the Goods and Service Tax.Dr Angrej Singh presented paper on “Emerging Trends and Issues in CentreState Fiscal and Financial Relations” He argued that devolution of powersto states accompanied with reasonable autonomy is the hallmark of federalism.The idea of Federalism, insists that centre and lower units must co-share thepowers of government and managing the polity. Equally important is centreand state should get equal credit benefits as wells as responsibility of losses.He stated that the centre gets a little over 60 percent in total revenue (taxand non tax) and states are left with less than 40 percent, including grants,whereas state governments share in revenue expenditure is around 57 percent.The constitutional provision of Finance Commission is to examine centre statefinancial relationship and also identify and examine spheres where statesneed central assistance. The unique feature of Indian Constitution is theentire revenue and expenditure accounts of both centre and states are auditedby single centralized authority – the Comptroller and Auditor General ofIndia. He mentioned that in this background the 14 Finance Commission hassuggested a radical overhaul of the centre and state fiscal relationship. It hassuggested that the states’ share in central tax revenue should be increasedfrom existing 32 percent to 42 percent. This is the largest increase eversuggested. He argued that centre is not boss or dictator in the federal structure– it is like elder brother and states are younger brothers. He suggested thatcentre should regularly monitor economies of states – to generate confidenceand motivation – in states to perform better. This regular monitoring of stateeconomies – will enthuse necessary dynamism in centre state financial relations.Dr. Debesh Bhowmik, IIDS, Kolkata presented paper entitled “Macro Economicsof Indian Fiscal Deficit and Fiscal Convergence of Indian states. Heargued that from 1970-2015 fiscal deficits is increasing. He discussed theARIMA model in this regard.Hemlata Tiwari presented the paper titled: “Cooperative Federalism; theCurrent Need of Hour”. In this paper she emphasized that Indian being afederal polity there are many occasions when political parties with competingideologies are in power in centre and states. Therefore, there is need of cooperativefederalism to ensure speedy economic development. She analyzed relationshipbetween how certain independent macro variable are influencing variableslike foreign investment, GDP growth and employment. Cooperative federalismspirit argued will create favorable environment for foreign Investment.Ankit Kumar Suryavanshi, presented paper on ‘A Study of Fiscal Space ofBIMARU States’. He argued that the option available to these states tospend on priority sectors without compromising with fiscal health is verynarrow. The papers demonstrated that Bihar is developing at good pace,



which is because of the increasing expenditure on development activities inthe state. In Rajasthan although the Fiscal Deficit (FD) – Gross State DomesticProduct (GSDP) ratio is declining but it – the FD / GSDP is highest amongall BIMARU states. In case of Jharkhand the growth FD is low. But the gapbetween FRBM target and deficit is a matter of concern. This gap could benarrowed by curtailing unproductive expenditure.In one parallel session Dr. D.K. Madaan, Punjabi University, in his addressdiscussed that the impact of GST on centre – state relations. He said theconstitutional provision of appointing finance commission at every five year isrobust method to identify the criteria of division of revenue between centreand states. But as we know that transfer of finance from centre to state takesthree routes – shares in taxes and duties, grant and loans. The financecommission covers only one third of the total transfer – the rest are channeledthrough planning commission (now the Nitti Aayog) and other discretionarygrants from centre. This is somewhat arbitrary and many states feel neglectedand state autonomy threatened. The 14th Finance Commission, as per ProfessorMadaan, feels that the states are mature enough therefore recommendedspending decision should be in the hands of states. Consequently, he raisedthe share of states 32 to 42 percent of the net union tax receipt. He opinedthat the so far centre and states were levying taxes separately. Their jurisdictionas well-defined, after implementation of GST, the power of state and centre toimpose taxes cross each other – they have to create consensus on variousissues. The taxing powers are based on the recommendation of GST council.The constitution of GST council is reflecting of the spirit of federalism– asonly one third say in GST council, and all decision will taken on three fourthmajority. Thus there is a challenge to maintain cordial relationship betweencentres – state. He opined that GST is a destination based multi stage system,replacing 17 indirect taxes like excise duty, service tax VAT etc. and 23 cess.GST is based on the ideal of one nation –one tax and is of three type CentreGST, State GST / Union Territory GST and IGST. GST is collected at point ofsale and not at a point of manufacturing.In another parallel session, Dr. Dimpal Vij gave a special presentation. Basedon sound data she discussed in details the centre state fiscal relationshipin India and how these relationship affect economic growth and development.She stressed on the need to review centre state fiscal relationship. She elaboratedon the spheres of conflict between centre and state specifically between theneeds of state and central governments. She said, the gap between resourcesand needs of state is growing largely because of population growth, urbanizationand increasing aspirations of people. Every state is competing with others inevery sphere of development and states want to shed away the BIMARU andlikewise dubious tags. Many states wants to develop on their own and for


that they need financial autonomy – as they feel that centre on this and thatpretext discriminate among states in disbursing loans and grants.Concluding the session Professor S.K. Mishra Proposed vote of Thanks.

Technical Session–IIThe Emerging Contour of Centre State Fiscal Relation in India

Chairperson: Professor Ghanshyam Singh, Director, NIRUS, Mumbai.Co-Chairperson: Professor S.R. Agarwal, former Pro. Vice Chancellor,Bundelkhand University.Special Address: Professor P.K. Chaubey, Director Institute of Management,Lucknow.Twenty papers were presented in this session. The paper, ‘Contribution ofNABARD in the Rural Development of Uttar Pradesh’ was presented byAnukrati Srivastva Utilizing secondary data on five parameters – Agricultural,infrastructure, cottage and small industries, employment and womenempowerment, she endeavoured to assess the contribution of NABARD in ruraldevelopment of Uttar Pradesh. Dr. Swati Jain presented a paper on ‘Convergenceof Fiscal Behaviour and Sustainability of Federal Transfers’. Utilizingpublished data on fiscal behviour of various states and their fiscal relation,she argued that major fiscal indicators such as tax revenues, capital outlays,social sector expenditure and debts, deficit and revenue expenditure etc. arelow and high for different states but are reflecting tendencies of convergence.This is happening in lower as well and higher income states.

Technical Section–IIIWomen and Development

Chairperson: Dr. A.K. Tomar.Co-Chairperson: Dr. Samta Jain, Jabalpur.Special Address: Dr. Nomita Kumar.Rapporteur: Dr. Urjaswita Singh, David Campbell and Babita Singh.Dr. A.K. Tomar, first of all detailed out the guidelines for the paper presentersand Dr. Nomita Kumar, gave a presentation on women and development. Inthis session 12 papers were presented. Parmod Kumar presented paper on“Gender Discrimination, with reference to Nainital District” Rita Gunwalin her paper analysed the factors affecting Female Poverty and Itsconsequences. Ansuyua Biswas discussed the paper “WomenEntrepreneurship Development”. In this paper she discussed role of mediumand small scale industries in promoting women entrepreneur. Archna Paldiscussed development of women in Indian perspective.



Urjaswita Singh, discussed the present status and future prospect ofeducation and skill development of women, in the next of changing scenarioof entrepreneurship and job market. Shobha Jain presented a paper on WomenEntrepreneurs with special reference to Aligarh District.

Day 2, 15th October, 2017Technical Session–III

Women and DevelopmentChairperson: Professor G.M. Dubey, Head, Department of Economics, H.S.Gaur University, Sagar, M.P.Co-Chairpersons: Dr. Abha Agarwal and Professor Sandeepa Malhotra.Special Address: Dr. Hansa Jain, SPIER, Ahemadabad.Rapporteur: Dr. Sangeeta Gupta and Dr Bhuvenshwar Singh.Important papers discussed in this session are given below. The Paper ‘WomenEntrepreneurs: Problems & Suggestion’ by Dr. Indu Vashrney, on thebasis of primary data collected from 400 women entrepreneur concluded thatthere are four important problems in development of entrepreneurship amongwomen. These problems are lack of awareness, lack of training, lack of familycooperation and financial constraints. The paper suggested women educationand women empowerment and formation of self employment association ofwomen, could contribute in removing the hurdles in promoting entrepreneurshipamong women.Dr. Shobha Rani presented a paper on “Livelihood options in theEmpowerment of Women” Based on primary data collected from scheduledcaste villages, the paper documents the important role played by Self HelpGroups in strengthening the livelihood security of women.Dr. Shiv Kumar Lal Discussed the various provisions pertain to rights ofwomen in Constitution of India. He also discussed the situation of crimeagainst women in various states of India and detailed out the women welfaremeasures undertaken by centre and state governments. His paper was titled“Contribution of women in Emergence of India”.Dr. Rama Rani presented a paper “Women Empowerment and Development”.She argued that women empowerment is not western concept. All over theworld attempts are made to eradicate gender inequalities and governmenthave enacted several legislation and launched programme to empower women.However, citing case of low literacy women vis-à-vis men, she argued is atestimony that much need to be done in this regard.Dr. Rukhsana Begum, presented a paper entitled “Women and Violence”.Her focus was on domestic violence and on the available legal remedies.


“Socio-economic Dimension of Women empowerment in 21st century”-paper present by Dr. Gajendra Nath observed the rural women are still sufferingfrom the pains of social backwardness. To alter this situation, he argued thatthe social values have to change radically Dr. Rajesh Pal Singh in his paper”Development of Women” analyzed the various schemes of Government of India-such as Beti Padhoa Beti Bachoa, Knaya Smridhi, Pradhan Mantri UjjvalaYojana, devoted to women development.Dr. Heera lal discussed the participation of rural women in Agriculture andother economic activities and argued that condition of women need to beimproved to strengthen the economy. He entitled his paper as “Need of WomenEmpowerment in Indian Agriculture sector”.Rashmi Rai, on the basis of primary data collected from District Lucknowand Unoan of UP, argued that the much is needed to done to improve the lotof rural women and NGO's and Self Help Group can contribute a great dealin this process. She entitled her paper as “Self Help Group and RuralWomen Empowerment: A study with special Reference to Unnao andLucknow District”.Era Tiwari presented a paper on “Putting Women at Centre: DevelopmentDynamics with Special Reference to India”.Before conclusion of the session Dr. Hansa Jain made a special presentationon “Women and Development in the Context of Changing Scenario forwomen”. Dr. Abha Agarwal also gave a special address on the themes of thetechnical session.Finally Professor R.M. Dubey addressed the delegates.

Technical Session–IVWomen and Development

Chairperson: Professor P.S. Bisht, Kumaon University, Nainital.Co-Chairperson: Dr. Anup Mishra, D.A.V. College, Varanasi.Special Address: Dr. Dinesh Kumar, C.C.S. University, Meerut.Rapporteur: Dr. Qamar Alam, Banasthali Vidyapeeth.Following important papers were presented in this session. Neha Vishwakrmapresented paper titled “Women Participation in Agriculture Employmentwith special reference to UP” She analysed in details the working hoursand working conditions of women. She argued that better working conditioncan reduce the drudgeries of women and also could contribute better in economicdevelopment.



Babita Singh analyzed “The Impact of demonetization on female labourin Bundelkhand Region” She analyzed the challenges posed by demonetizationto female workers and what processed they have adopted to them.Vijaylaxmi Yadav analyzed “Role of Agriculture Products in WomenEmployment” She demonstrated that economic condition of women growingvegetable even after toiling ten to twelve hours, is pitiable.Dr. Anup Kumar Mishra in his address said that empowerment of women isan important indicator of national development... The priority to empowerwomen and develop their social and economic status ultimately trickles downand positively impacts each and every aspect of national development.Dr. Qamar Alam narrated the programme and facilities that, BansathaliVidhaypeeth provides to its female students and also community at large. Heargued that some of the progrmmae, other universities and institution forsure, will find worth emulating.

Technical Session–VDynamics of Migration in UP and Uttarakhand

Chairperson: Dr. M.A. Beg, Principal, Dr. Zakir Hussain Delhi College,(Evening) New Delhi.Co-Chairpersons: Dr. B.B. Tiwari, Lucknow.Rapporteur: Dr. Shristi Purwar, Nitin Srivastva and Heera Lal.In this session following papers were presented:• David Campbell and C.B. Singh: Exploratory study of Factors Influencing

Migration in Uttar Pradesh.• Sarwadaman Kashyap: Migration of Labour from Bihar.• Sumy Singh: Women entrepreneur in e-business.• Qaiser Alam: Women labour in India An Evaluation.• Maher Mishap: Impact of Cross Culture on Business.

Valedictory SessionThe concluding session was chaired by Professor Ravi Srivastava, PresidentUPUEA and Professor B.L. Pandit, Delhi School of Economics delivered thevaledictory address. Guests of Honours Prof D.K. Nauriyal, Vice Chancellor,Kumaun University and Prof. P.K. Chaubey, President, Indian EconomicAssociation, also addressed the audience. Professor S.K. Mishra, General


Secretary, UPUEA extended thanks to the delegates, distinguished resourcepersons, to the Vice Chancellor Bundelkhand University, for graciously makingall the necessary arrangement for the conference and making this 13th Conferenceand an event to uphold for many years to come. Professor Mishra, speciallyexpressed gratitude to Professor M.L. Maurya, Organizing Secretary of the13th UPUEA Conference and Professor C.B. Singh Dean of Arts Faculty fortheir tireless efforts and organizational skills to make this conference a grandsuccess. He also extended thanks to the entire university staff for selflesslysupporting and extending helping hand to the conference.

(1Report is based on rapporteurs report)



Editorial Policy

WelcomeUPUEA Economic Journal is an organ of the Uttar Pradesh-UttarakhandEconomic Association. It is a biannual journal and publishes material inHindi and in English. It welcomes articles, research papers, book reviews,communications, review articles and proceedings of a seminar/symposium/conference in either of the languages. Though it is a journal of economics yetit encourages papers holistic in approach—borrowing liberally from sistersocial science disciplines. It publishes papers with regional settings too.

Academic IntegrityCommitted to uphold ethical standards and originality, the journal has zerotolerance toward any for.m plagiarism. Copy and pasting is strictly prohibitedand likely to invoke penal action. Authors found indulging in plagiarism willbe listed and banned for participation in activity of UPUEA. Authors areadvised to take extraordinary care to distinguish their own ideas and thosederived from sources—whether material is published in print or online oraccessed directly from people such as informal discussion. All paraphrasedmaterial must be duly acknowledged. Authors will be solely responsible fortheir illegal actions. Journal will also black-list them if found engaged inplagiarism.

SubmissionElectronic submission of manuscripts is strongly encouraged. Manuscripts aswell as all supporting documents should be sent as attachments to the mailwhile the message in the text should contain following information:

? Author’s name/Authors’ names? Institutional affiliation(s) with full address details? Phone numbers and emails? Title of the paper

The mail should be sent to Executive Editors with copy to Editor-in-Chief andGeneral Secretary. Their mails are given below:



Editor-in-Chief: [email protected]; [email protected]; General Secretary:[email protected]

Size Restriction

Article/Research Paper 4000 words Review Article/Perspective 6000 words

Communications/Proceedings 500 words Book Review 1000 words

Guidelines for StyleManuscript should preferably be prepared in MS Office (word and excel) inArial font of size 12 and pages, should be left aligned, and should have 1.5line spacing. Manuscript should be complete in all respects—in terms ofreferences, footnotes and acknowledgement. Pages should be numbered. Sourcesfor all tables, graphs, figures, diagrams, and maps should invariably be provided,wherever they are applicable. Footnote should be in the foot of the page andacknowledgement in the foot of the first page. Acknowledgement of people,grants, funds, etc should be complete but brief.Regular article and research paper: It should be an original piece ofresearch and ample details should be provided for others to verify the work.It should be around 4000 words. An abstract in about 100 words with completedetails of the authors and their affiliation should be submitted along withpaper on a separate sheet. It would be appreciated if keywords are also given.Review article and perspective paper: Review of literature or perspectivepaper on state of the art or current policy interest is also welcome andencouraged. An attempt should be made to make it as concise as possible andouter word limit of 6000 words should be respected.Short communication and proceedings: A short description of importantresearch findings which requires urgent attention can be submitted in notmore than 1000 words. Likewise, proceedings of social science seminars/workshops/conferences may be sent for publication in not more than 1000words.Notes: Notes should be given in foot of the paper but the sequence shouldrun throughout the paper. It would be advisable to use references in the MSWord.Referencing: A reference in text should be in terms of the family name ofthe author followed by the year of publication. When there are two authors,family names of both should be spelt with ‘and’ in between. When there aremore than two authors, only the first author’s name should be followed by ‘etal’. In order to distinguish two references by same set of authors in the same

Editorial Policy


year, ‘a’ and ‘b’ may be added to the year. References listed at the end of thepaper should be in alphabetical order. A few suggestions are made below.Examples: Sen (1999), Bhagwati, et al. (2001), (Chaubey, 1995), (Srivastavaand Singh, 2002), (Raj, 1976; 1987 a, b; Panagaria, 2004, 2005), (Rao, et al.,2001). They should be sufficient to cases not referred to herein, like governmentreports or newspaper items, social sites, etc.Data Sources: Data sources should be given in full, even up to page. Writingin bland like Census of India, 2011 or CSO is not enough. In fact, it ismisleading and erroneous. If source used by the author is not original, s/heshould the source s/he has actually used. Authors are advised that it willconvenient to use APA method for reference citation. It is inbuilt in MicrosoftWord 2007 and onwards. It has pre-determined format to fit in the aboveformat of referencing as adopted by this journal . Additonally it automaticallygenerates the list of all references that on cites in the text in alphabeticalorder.

ReferencesArticle: The order of reference should start with family name of the firstauthor, his/her first name followed by second and subsequent authors in thesame sequence, year of publication in parentheses, (semi-colon), title of thepaper within inverted commas, title of the journal in italics, volume andnumber of the issue, and pages with pp. Examples: Sukhatme, PV (1981)“On Measurement of Poverty”, Economic and Political Weekly, Vol 16, No 32,pp1318-24Book: The order of reference should start with family name of the first author,his/her first name followed by second and subsequent authors in the samesequence, year of publication in parentheses, (semi-colon), title of the book initalics, and within parentheses city and name of the publisher with colon inbetween. Example, Basu, K. (2000); Analytical Development Economics: TheLess Developed Economy Revisited (Cambridge, MA: MIT Press).Internet publication: The order of reference should start with family name ofthe first author, his/her first name followed by second and subsequentauthors in the same sequence, year of publication in parentheses, (semicolon),title of the publication within inverted commas, and website and importantlythe URL.Example: Connor, Phillip (2013); “5 Challenges to Estimating Global Migration”http:/www.pcwresearch.org/fact-tank/2013/10/25/5-challenges- to-estimating-global-migration/


Copyright PolicyIt is expected that the article submitted has not been published before in thisform (except in the form of an abstract), nor is it not under consideration forpublication somewhere else. If and when the article is accepted for publication,the authors are supposed to have consented to automatic transfer of thecopyright to the journal. Those who like use the article elsewhere should seekpermission of the journal, from the Editor-in-Chief.

Fees and ChargesAuthors are to be charged a handling fee. However, only the authors whosearticle is accepted for publication shall be asked to the handling fee. Studentauthors without stipend may request by postal communication, withrecommendation from the guide, to the Editor-in-Chief to waive a part of thehandling fee under special circumstances.

Editorial Policy


Certificate of Submission

Title of the Paper:I/We am/are submitting the above cited paper for favourable consideration forpublication in an issue of the UPUEA Economic Journal.I/We have taken utmost care to conform the paper in terms of length, style,referencing, citations, and other parameters as indicated in the editorial policyof the Journal.

Declaration of Non-Plagiarism

I/We further undertake to declare that the paper is entirely original and noparts have been copy-pasted. I fully understand that I may be debarred forlife from publication in the UPUEA Economic Journal should my paper befound to be a plagiarised piece.

Name(s) of the author(s)

Signature(s) of the author(s)



EXECUTIVE COUNCIL

1. Association President: Prof. Ravi Srivastava, CSRD, JNU, New Delhi2. President 14th

Conference (2018): Prof. Jagdish Narayan, Allahabad University3. Executive President: Prof. Ashok Mittal, AMU4. Vice President: Dr. A.K. Tomar, Director, Lal Bahadur Shastri

Women’s College, AligarhProf. Pradeep Kumar Pandey, M.G. KashiVidyapeeth, VaranasiProf. P.S. Bisht, Kumaun University, Nainital

5. General Secretary: Prof. S.K. Mishra, Pt. Deendayal UpadhyayChair, BHU, Varanasi

6. Treasurer: Dr. Anoop Kumar Mishra, DAV College, Varanasi7. Joint Secretaries: Prof. M.C. Sati, HNB Garhwal University,

Srinagar, U.K.Prof. C.B. Singh, Bundelkhand University, JhansiDr. Vinod Kumar Srivastava, RML AwadhUniversity, FaizabadDr. Dushyant Kumar, Meerut University

8. Editor in Chief: UPUEA Economic Journal: Prof. P.K. Chaubey,Former Director, IMS, Lucknow University

9. Regional Coordinators: Prof. V.P. Tripathi, Agra University (Western U.P.)Dr. Birendra Singh, Tibettan Central University(Eastern U.P.)Dr. V.B. Chaurasia, DAV College, Dehradoon(Uttarakhand)Dr. B.B. Tiwari, Lucknow (Central U.P.)Dr. U.R. Yadav, Jhansi (Bundelkhand)Dr. Angraj Singh, Pilibhit (Rohilkhand)Dr. Indu Varshney, DS College, Aligarh (CampOffice)



Members of the Executive Committee

Prof. S.P. Singh IIT, Roorkee, U.K.Dr. Priti Atreya Garhwal UniversityDr. Abha Agrawal Kumaun UniversityDr. Dinesh Kumar Meerut, Meerut UniversityDr. Mamta Singh Meerut, Meerut UniversityProf. Nisar Ahmad Khan AMU, AligarhDr. Prashant Agrawal Ferozabad, Agra UniversityDr. Nirja Maheshwari Agra UniversityDr. Vishal Dubey Badaun, Rohilkhand University,Dr. Shambhunath Singh Bundelkhand UniversityDr. Ripu Daman Singh Etawah, Kanpur UniversityDr. Umesh Yadav Kanpur UniversityProf. Nar Singh Lucknow UniversityProf. N.M.P. Verma BBRAU, LucknowDr. Rashi K. Sinha DSMRU, LucknowDr. Rajbir Singh Bahraich, Awadh UniversityDr. Dimpal Vij GhaziabadProf. Prahlad Kumar Allahabad UniversityDr. R.P.S. Yadav RTOU, AllahabadDr. V.D. Sharma Purvanchal University, JaunpurDr. Alok Kumar Pandey BHU, VaranasiDr. Jagdish Singh Varanasi, MG Kashi VidyapeethProf. Rajnath Sampurnanand Sanskrit UniversityProf. Sandeep Kumar Gorakhpur UniversityDr.Shobha Jain Aligarh, (Camp Office)

Invited EC MembersDr. Satish Chand Dwivedi (MLA), Kushinagar, Gorakhpur UniversityDr. Ranju Narang, MeerutDr. Savita Tomar, MeerutDr. Urjaswita Singh, Varanasi


Volume 11, Number 1 ISSN 0975-2382 Uttar Pradesh ... DELHI JOURNALS 2018 15-12-2018.pdfLee Kuan Yew...

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Transcript of Volume 11, Number 1 ISSN 0975-2382 Uttar Pradesh ... DELHI JOURNALS 2018 15-12-2018.pdfLee Kuan Yew...