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LETTERS

Issn 0012-9976
Ever since the first issue in 1966,
EPW has been Indias premier journal for
comment on current affairs
and research in the social sciences.
It succeeded Economic Weekly (1949-1965),
which was launched and shepherded
by Sachin Chaudhuri,
who was also the founder-editor of EPW.
As editor for thirty-five years (1969-2004)
Krishna Raj
gave EPW the reputation it now enjoys.

editor

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Editor: Paranjoy Guha Thakurta.

Equality, Not Uniformity

he point made by Flavia Agnes that


the Indian media wrongly projects
Muslim women in India as devoid of
rights with the only recourse open to
them being to challenge their personal
laws is well taken (Muslim Womens
Rights and Media Coverage, EPW, 14
May 2016). To this, it may be added that
it is also wrongly perceived by many
that Hindu laws offer equal rights to
men and women. Lack of media coverage of important judgments plays a role
in perpetuating this myth. The judgment in Prakash and Ors v Phulvati
and Ors, AIR (2016) SC 769, wherein
the Supreme Court held the Hindu
Succession (Amendment) Act of 2005
applies prospectively and not retrospectively did not receive much attention
from the media. However, denial of discrimination perpetuated by personal
laws, or the mistaken belief that the
Protection of Women from Domestic
Violence Act, 2005 (PWDVA) can resolve
all inequalities should not trump attempts
at reform of personal laws.
Hindu laws do not offer full equality
to women. For example, the Hindu Succession (Amendment) Act, 2005 gave
daughters coparcenary rights but it did
not give equal rights of inheritance to the
natal family of a woman (that is, primacy
is given to agnates over cognates). As per
Section 15 (1) of the act, the heirs of the
husband have primacy over the heirs of
a wife. So let us say a Hindu woman leaves
her Hindu husband due to his acts of
cruelty. She does not formally divorce him
as obtaining a divorce on fault grounds is
tedious. Should she die without making a
will, her entire earnings will devolve
upon the heirs of her former husband.
Another example is that of a daughter of
a divorced/separated mother. Should the
daughter inherit her mothers property
and then die without making a will, the
property goes to the heirs of her father,
and not to the heirs of her divorced/
separated mother. This is ludicrous, particularly if the property was inherited by
the mother from her own natal family.
While the courts have taken a reformist
view with regard to personal law matters

on a case by case basis, they have


remained hesitant to intervene broadly
on the issue. Gender equality in personal laws remains elusive. As mentioned
by Agnes, various judgments by the
courts in India have sought to restrict
the right of Muslim husbands to annul
their marriages arbitrarily through triple talaq. The Supreme Court in Shamim
Ara v State of UP and Anr (2002) 7 SCC
518 held that talaq in order to be effective has to be pronounced and did not
recognise the dissolution of the marriage as there was no proof of the talaq
having taken place. But triple talaq has
still not been declared unconstitutional
in India.
The PWDVA cannot rectify the problem
of unfair personal laws. Matters of
marriage, custody, adoption, inheritance
and divorce are determined by personal
laws and not by the domestic violence
law. The PWDVA cannot prevent triple
talaq from taking place, although it
does provide civil remedies to divorced
women in the form of maintenance, or
residence rights.
Furthermore, what is of concern is that
while women are asking for protection
orders and the right of residence under
the PWDVA, there is a discernible reluctance among Courts across all States to
pass orders which may directly or indirectly create a property right that is not
recognised under personal laws. This
conservatism on the part of the Courts
is an unfortunate development as the
right to reside is one of the clear positive
rights created by the PWDVA [Lawyers
Collective Staying Alive: Sixth Monitoring and Evaluation Report (2013),
page 61]. While the PWDVA was envisaged as a secular law, the more substantial rights offered by the PWDVA have

July 9, 2016

Obituaries
The EPW has started a section, Obituaries,
which will note the passing of teachers and
researchers in the social sciences and
humanities, as also in other areas of work.
The announcements will be in the nature of
short notices about the work and careers of
those who have passed away.
Readers could send brief obituaries to
edit@epw.in.
vol lI no 28

EPW

Economic & Political Weekly

LETTERS

been diluted by judicial interpretation.


Although personal laws have little or
no impact in the grant of maintenance
orders to women, the right to residence
under PWDVA is often confused with
property rights under personal laws by
the judiciary.
Article 13 of the Constitution makes
all lawscustomary and statutory or
otherwisesubject to the Fundamental
Rights chapter, including religious
freedom and equality. Article 372 of the
Indian Constitution deals with the continuance in force of existing laws and
their adaptations. It is by virtue of Article 372 (and not by virtue of Article 25,
that is, the right to freedom of conscience,
and free profession, practice and propagation of religion) that the policy of recognising personal laws has been continued into the post-independence period. In
a series of judgments [State of Bombay v
Narasu Appa Mali AIR 1952 Bom 84,
Reynolds Rajamani v Union of India
(1982) 2 SCC 474, Maharshi Avadesh v
Union of India (1994) Supp 1 SCC 713,
Pannalal Bansilal Pitti v State of AP
(1996) 2 SCC 498, Ahmedabad Women
Action Group and Others v Union of India
(1997) 3 SCC 573], the Supreme Court
has refused to treat personal laws as
vulnerable to the Fundamental Rights of
the Constitution.
The Bharatiya Muslim Mahila Andolan
conducted a survey noting that more
than 90% of Muslim women want triple
talaq banned (Muslim Womens Views
on Muslim Personal Law, EPW, 19 December 2015). One of the reasons for discomfort with the concept of a uniform civil
code is the potential loss of religious
identity. In a communally tense atmosphere, the fear of such loss is heightened. Consequently, stressing on gender
equality (rather than uniformity) would
benefit in the acceptance of need for
change in personal laws.

that Punjab has been overusing groundwater and applying excessive urea, and
on top of that the drug problem has
worsened in Punjab as depicted in the
Udta Punjab movie.
It is also clear that the central government has no urgent intentions to
save Punjab from these crises or
India from the crisis of the deficit
in proteins. The blindfolded ban on
cow slaughter has not only increased
the cost of culling excessive stock of
cattle but has unfairly prevented significant number of lower caste and
those of non-Hindu faith Indians from
eating beef.
The basic course of agronomy has
taught us that pulses fi x nitrogen in
soil and are good for sustainable agriculture. Pulses can reduce the demand
for urea as well as water. So, Punjab
can leverage on promoting the pulse
wheat rotation on farms and getting
out of the vicious cycle of the rice
wheat rotation promoted by the incorrect procurement and subsidy policies
of the central government. For this
purpose, Punjab should demand financial support from the central government in the form of subsidies for the
promotion of pulses. These can be
treated as input subsidies since the
pulse crop can be treated as an input
for maintaining soil fertility.
A comprehensive economic analysis
shows that this will not only help India
in reducing the protein deficit even
while keeping the ban on cow slaughter,
but will also help in making agriculture
in Punjab sustainable. Sustainable agriculture will also help in reducing the
drug crisis in Punjab and as a chain
reaction in other cities from Mumbai
to Kochi.

ncounter killings and rapes have


become an organic part of everyday
life in the tribal state of Chhattisgarh in
recent years. The fact-finding reports of
human rights organisations bear testimony to it. The latest addition to this saga
of state violence is the rape and killing
of a 16-year-old girl, Madkam Hidme, in
the Gompad village of Sukma district.
The parents of the girl reported to the
media that their daughter had been married eight days before she was killed. The
Aam Aadmi Party tribal leader, Soni Sori,
alleged that Hidme was picked up from
her home, raped and killed before being
branded as a Maoist.
The press release of a fact-finding team
of the Civil Liberties Committee, Andhra
Pradesh and Telangana, and Committee
for the Protection of Democratic Rights
tells us a story of horror and shame. Let us
summarise the story: On 13 June 2016,
around 200 paramilitary men along with
Koya Commandos entered the Gompad
village and started beating the people
indiscriminately. They entered Hidmes
house, dragged her out and trampled on
her in front of the villagers. Later, they took
her to the nearby forest, where a paramilitary camp is located, by threatening the
villagers at gunpoint. What happened to
the girl thereafter? According to the investigating team, the parents and villagers told
them that she was brutally raped before
being killed in the fake encounter. In order
to cover up the brutal sexual assault her
clothes were burnt. An olive green uniform
was put on her body and a gun in her hand.
The above episode, to speak in the
language of Arundhati Roy, makes the
civilisation/savagery binary blurred in
our imagination.

Chandrashekhar G Ranade

Arup Kumar Sen

WASHINGTON DC

Kolkata

Gayatri Sharma

Web Exclusives

New Delhi

The following articles have been published in the past week in the Web Exclusives section of the
EPW website.

Pulses, Udta Punjab


and Nutrition

t is a well-established fact that India


has been short of domestic supply of
pulses. Somewhat less known fact is
Economic & Political Weekly

Savagery of the Civilised

EPW

July 9, 2016

(1) Source of the Rivers, Scams of the RulersP Sainath


(2) The Sacred Waters of a TankerP Sainath
(3) Students Lampooned and the Bihar Board LurksAjay Kr Sharma
Articles posted before 25 June 2016 remain available in the Web Exclusives section.

vol lI no 28

LETTERS

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Economic & Political Weekly
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Email: edit@epw.in, epw.mumbai@gmail.com

July 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

JUly 9, 2016

Should India Be a Member of the Sheriffs Posse?


War games in the China seas have ominous implications.

n 18 May, four Indian warships set out on a two-and-ahalf month deployment in the South China and East China
Seas, more generally, the north-west Pacific, ostensibly
to ensure freedom of navigation over there. Of course, the Indian
Navy is not aloneit is there to, among other things, carry out
joint military exercises (war games) with the navies of the United
States and Japan. Washington and New Delhi are supposedly furthering the USIndia Joint Strategic Vision for the Asia-Pacific
and the Indian Ocean Region, signed by Prime Minister Narendra
Modi and US President Barack Obama in January 2015, which
aims at safeguarding maritime security and ensuring freedom of
navigation and over-flight throughout the region, especially in the
South China Sea. The war games are an extension of Exercise
Malabar involving the US and Indian navies with the Japan
Maritime Self-Defence Force as a regular partner since 2014.
Exercise Malabar has gone a long way since it was first launched
in 1992 when New Delhi initiated its foreign-policy somersault in
the aftermath of the end of the Cold War. The ninth Malabar exercise, held in 2007, was perhaps the first one that went beyond the
Indian Ocean, in this case, off the Japanese island of Okinawa,
and the Japanese navy subsequently came on board first in 2009,
again in 2011, and then regularly since 2014. In 2007, Australia
and Singapore participated in military exercises in the Bay of
Bengal. So what is new about these geopolitical manoeuvres?
To answer this question we need to get to Obamas address to
the Australian parliament in November 2011 wherein he
announced that Washington was now going to turn its attention to
the Asia-Pacific. This focus was subsequently dubbed by his the
then Secretary of State Hillary Clinton, in an article in Foreign
Policy, as a pivot, and it then came to be known as Americas
Pivot to Asia strategy. Washingtons strategy has since encompassed a greater concentration of US military assets in the region,
an extension of defence ties, a step-up of military-hardware
exports and training programmes for its military partners,
more frequent visits by US warships, and, of course, more war
games. At the heart of the justification for the Pivot to Asia
something that remains mostly officially unacknowledgedis
the rise of China, which the US views as its principal adversary
in the region. As long as China succeeds economically and
geopolitically the Pivot to Asia will only deepen and grow.
And, with the convergence of New Delhis Act Eastearlier a
Economic & Political Weekly

EPW

JUly 9, 2016

vol lI no 28

mere Look Eastpolicy, one is bound to witness more war games


and, of course, port calls by Indian warships, like the ones in
Cam Ranh Bay in Vietnam, Subic Bay in the Philippines, Sasebo
in Japan, Busan in South Korea, and Port Klang in Malaysia.
Incidentally, India has concurred, in principle, with the US on a
Logistics Exchange Memorandum of Agreement which will give
the latter access to Indian ports and military bases. And, in the joint
statement The United States and IndiaEnduring Global Partners
in the 21st Century issued on 7 June after the third bilateral Modi
Obama summit, India has been recognised as a major defence
partner so that it can purchase the US militaryindustrial complexs
most advanced military hardware. Indeed, Modi in his address to
the Joint Session of the US Congress on 8 June, in a reference to
international rules and norms, pledged that it was Indias responsibility of securing the Indian Ocean region. Indeed, he got a standing ovation when he said that a strong IndiaUS partnership can
anchor peace, prosperity and stability from Asia to Africa and from
the Indian Ocean to the Pacific ... It can also help ensure security of
the sea lanes of commerce and freedom of navigation on the seas.
Frankly, no one, not even the claimant states in the multiple disputes in the East China and South China SeasJapan, Taiwan,
Vietnam, Malaysia, the Philippines and Brunei, none of which are
innocent parties in the disputesreally expect China to place restrictions on commercial shipping or interrupt the shipping lanes
that cross the South China Sea. What is at stake is military, not commercial, freedom, and here, it is the US that wants the right to
engage, unhindered, in military surveillance as close as possible to
Chinas shores. And, as far as the dispute between Japan and China
over the Senkaku/Diaoyu islands (presently controlled by Japan)
goes, without getting into the merits of the case, one should point
out that in the UN Convention on the Law of the Sea (UNCLOS)
which apportions the high seas in the form of exclusive economic
zonesthe former European and American colonial powers as
well as Japan have been unduly privileged in their claims on the
worlds oceans. Chinas maritime reach under UNCLOS is not even
one-fifth that of Japans. These are some of the observations made
by Vince Scappatura in the Asia-Pacific Journal (9 September 2014).
But why should India parrot the US line on all these disputes in
the East China and South China Seas? Will such manoeuvring
further New Delhis ambitions of becoming a great power, as the
hawks in South Block seem to think? Richard Haass, a member
7

EDITORIALS

of the National Security Council in the administration of US


President George W Bush, used to refer to the US as the sheriff
and its coalition of the willing (that is, its client states) as his

posse, both of which, he advised, need not be too worried


about the law. Should New Delhi be a part of this posse, this
coalition of the willing that is above international law?

JUly 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

EDITORIALS

Divine-bodied Disabled
Access to education and the labour market is abysmal among Indias disabled.

n May this year Indias 2.68 crore persons with disabilities


who constitute 2.21% of the total population (rights organisations put the estimate at 5%) got a new nomenclature.
Henceforth, they were to be described as divyang (divine-bodied)
rather than the hitherto viklang (disabled). The protests that
followed said that the disabled wanted an enabling environment, not a new description. However, fulfilment of that demand
would entail not only access to education and work skills but also
jobs. The minister for social justice and empowerment admitted in
the Lok Sabha in May that employment of persons with disabilities (PWD) has been far less than the specified 3% reservation
in all categories of government jobs in the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act. In a recent ruling, the Supreme Court said that
there is hardly any representation of disabled persons in the
higher governmental hierarchy even though certain posts have
been identified as suitable for them. This state of affairs ties in
with the oft-repeated complaint by disability rights activists
that the disabled are either not recruited at all or are expected
to be grateful for employment in low-paying, lower grade jobs.
Over the years, the private sector has shown an increasing
willingness to employ the disabled though it is nowhere close to
what is needed. Some hospitality and retail chains along with
information technology (IT) and knowledge companies have
been proactive in training and employing disabled youth. The
live registers of employment exchanges and special cells have
an inordinately large number of the disabled looking for jobs
though reliable data as to how many are actually employed is hard
to come by. The International Labour Organization (ILO) report
says that the employment rates vary with geographical location,
gender, education and type of disability with the rural and women
disabled bearing the brunt of low access to education and health
services as well as vocational training and the labour market. It
points out that lower labour market participation is one of the
main pathways through which disability leads to poverty.

The apex courts ruling quashed the central governments


confinement of reservation to Group C and D posts, the distinction that had been made between posts to be filled through
direct recruitment and through promotion. The petition filed
before the Court challenged the governments policy that vacancies in Groups A and B (in identified and reserved posts suitable
for the PWD) would be filled only through direct recruitment in
the Prasar Bharati. This meant that disabled employees in the
Groups C and D category were denied the chance of promotion
to the higher ranks.
While this ruling clears the way for promotions for the disabled in government employ, disability rights activists observe
that overall recruitment, whether in the private or the public
sector, is hampered by sociocultural prejudices against the disabled. Again, disabled women face greater obstacles as compared to their male counterparts. Among those employed, the
group that is most favoured is the one with locomotor disabilities
and within that the ones with milder forms of it. The impediments in the way of implementing even the 3% reservation in
government sector jobs are many and have been listed by rights
activists. They include an unduly heavy dependence on the
courts to enforce the guaranteed reservation and the identification of jobs as suitable for PWDs based on biased and whimsical
assumptions about their capability.
The court rulings and media coverage coupled with the
efforts of rights activists have all helped to ensure increased
sensitivity to the disabled in government policies and societys
attitudes at large. However, given their share in the population
and the efforts needed to help them access basic services and
more significantly, education and employment, these efforts
seem woefully inadequate.
The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Acts intent is to turn those
whom it hopes to benefit into agents of their own destiny.
Intentions must be backed by actions.

JUly 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

EDITORIALS

Bangladesh: Whose Unfinished Revolution?


New radical groups have merged which cannot be checked by the Sheikh Hasina government.
Subir Bhaumik writes:

awrence Lifschultzs 1979 classic Bangladesh: Unfinished


Revolution predicted a final confrontation between the
forces of secular, linguistic nationalism and radical
Islam. Within four years of independence from Pakistan in
8

1971, the bloody coup that killed Sheikh Mujibur Rahman and
much of his family was followed by a fresh Pakistanisation of
Bangladesh under military rulers. Much of the ideology of a
liberal, secular state was undone in 21 years of military rule.
JUly 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

COMMENT

Sheikh Hasina failed to reverse this process during her brief


tenure (19962001) and the situation went from bad to worse
during Khaleda Zias second term (200106). Islamist radicals
created by the Bengali veterans of the Afghan jihad had a free
run with direct patronage from powerful people. The
Pakistan-backed Jamaat-e-Islami, whose supporters killed and
massacred thousands, was in government for the first time in
independent Bangladesh. That helped them advance the cause
of an Islamist Bangladesh with reunification with Pakistan not
a possibility.
Exasperated with jihadi excesses (serial bombings in 60 districts) and military rule with a civilian caretaker faade, the
people voted the Awami League back to power in December
2008 with an overwhelming majority. One of Hasinas election
commitments was to start war crime trials against killers and
collaborators of 1971. The executions that followed the trials of
senior Jamaat and Bangladesh Nationalist Party (BNP) leaders
resulted in an existential crisis for the Islamist opposition. Hasinas return to power was followed by more executions. Having
failed to unseat Hasina, the BNPJamaat combine launched a
six-month street agitation, fire-bombing buses, derailing trains
and attacking secular figures resulting in the deaths of at least
86 people. As Hasina crushed her opponents by determined police action and political mobilisation, there was a surge in jihadi
activitiesattacks on bloggers, writers, publishers and even a
professor who sought to popularise Baul music. First-generation
jihadis, veterans of the Afghan jihad who returned to form
groups like HUJI (Harkat ul-Jihad-i-Islami), attacked poet
Shamshur Rahman and writer Humayun Azad. There is a clear
continuity in the pattern of violence. The targeting is more political now to unsettle the DelhiDhaka relationship. Foreigners
have been killed to scare investors and buyers of garments from
Bangladesh to cripple the economy, while attacks on minorities
aim at creating a Bangladesh without non-Muslims (who are the
most loyal to the Awami League).
The new generation of Bangladesh jihadis is smarter and
tech-savvy. They prefer to listen to evangelists like Zakir Naik
or Islamic State (IS) chief Al Baghdadi instead of Jamaat leader
Delawar Hossain Sayadee. Their obvious target is the murtad

Economic & Political Weekly

EPW

JUly 9, 2016

vol lI no 28

(apostate) government of Hasina, described as a lackey of


Hindu India. Dhakas relations with Islamabad are at an alltime low. Two Pakistani diplomats and some non-diplomats
have been expelled on charges of funding jihadi groups with
fake currency. Bangladesh has threatened to review its diplomatic relations with Pakistan after its criticism of executions of
war criminals and threats to take the issue to the United Nations. The Bangladesh police recently launched a nationwide
crackdown against Islamist radicals. More than 14,000 suspects
were nabbed in a week. The opposition claimed that Hasina was
trying to decimate her political rivals to create a one-party
state. She was compared to Hosni Mubarak in Egypt where
security forces that had once defended the secular ideals of
Nasser and Sadat turned that country into a police state.
Without doubting Hasinas democratic credentials, the capabilities of her police and intelligence services are clearly found
wanting in tackling the latest wave of Islamist radicalism. While
one set of radicals had operated with the support or those in the
BNPJamaat coalition government, a second generation of
Islamist radicals has emerged. These groups are better trained
and equipped with support from Pakistans Inter-Services Intelligence (ISI). New groups like Ansarullah Bangla Team, Hizb-urTahrir or the Islamic State of Bangladesh (ISB) operate on a decentralised basis run by leaders who do not expose themselves
to the footsoldiers. In Bangladesh, the Islamist radical forces are
now regrouped and reorganised into two main groupsone
connected with the IS and the other to al-Qaeda in the Indian
Subcontinent (AQIS). Traditional Islamist groups like Jamaat ulMujahideen Bangladesh and HUJI have made place to the two
new organisations which do not differ from one another ideologically but which are organised on two elongated cell structures, operating with proper cut-outs and on a need-to-know
basis to avoid major damage to the organisations in the event
of arrests of particular individuals. This has made it all the more
difficult for Sheikh Hasinas government to check the recent
waves of violence in Bangladesh.
Subir Bhaumik (sbhaum@gmail.com) is an author and senior editor
at bdnews24.com.

COMMENT

First Published in 1966

To mark 50 years of EPW, each week in 2016 will


present an extract from our archives.
Vol XXVIII, Nos 27 & 28
JUly 310, 1993

WEST BENGAL

Open Congress-BJP Alliance


Ajit Roy writes:
There are some elements of ambiguity in the
outcome of the state-wide panchayat polls
along with the elections to 16 urban municipalities held in West Bengal on May 30. The
victory of the CPI(M) and its Left Front allies
is decisive, but this is accompanied by some
evil features with grave portents. ...
Economic & Political Weekly

EPW

JUly 9, 2016

... it was for the first time in West Bengal that


the Congress(l) and the BJP joined hands in an
electoral battle openly and without a smokescreen, as they did in some localities. One of the
BJP national leaders, S S Bhandari, publicly
exposed this liaison (deliberately, it seems, in
order to embarrass the Congress(I) elsewhere)
and the fact was later corroborated by some
Congress(I) leaders. This joining of forces of the
Congress(l) and the BJP has an ominous significance beyond the immediate electoral calculus.
Through this open, even if limited linkage, the
BJP, in the supposedly left-oriented state of
West Bengal, has been able to overcome the
inhibition of a segment of liberal nationalists
to align openly with Hindu nationalists, forgetful of its overall impact on national interests in general. It has, to say the least, made

vol lI no 28

the BJP somewhat respectable in some circles


beyond its direct ideological reach.
This new turn was carried forward when
the Congress and the BJP objectively acted together in organising a statewide bandh, a
week after the polls, on June 7 to register their
protest against CPI(M) violence during and
after the polls. That the bandh was a success
was confirmed by the secretary of the CPl(M)s
West Bengal state committee who is also the
chairman of the Left Front. ...
All this, further compounded by the arrogance of some of its accredited spokespersons
in their public comments, has not enhanced
the CPI(M)s credibility and acceptability as
the central fulcrum of an alternative left and
democratic mobilisation against the visibly
bankrupt Congress(l).

MARGIN SPEAK

Rohith Vemulas Dalitness


Anand Teltumbde

The answer to a situation


where institutions that at
least maintained a facade of
democracy are being destroyed
and any dissenting opinion is
being targeted, can come from
students who oppose such moves.
Perhaps, it is such students
who will ensure justice for
Rohith Vemula.

ohith Vemula, the Dalit research


scholar from Hyderabad University, who has become the face of
students resistance all over the country
was driven to commit suicide allegedly
due to the acts of Appa Rao Podile, the
controversial vice chancellor of the university backed by the ruling Bharatiya
Janata Party (BJP) dispensation. It was
definitely an institutional murder but
not without a face. A massive agitation
broke out demanding justice for Rohith
and a spate of meetings were addressed
by all shades of political leaders, except
those from the BJP. A joint action committee (JAC) for justice to Rohith was born
and a number of campuses around the
country took up its call. In the heat of the
agitation, Appa Rao had disappeared
from the scene and while the demands
of the JAC, particularly for the dismissal
and arrest of Appa Raothe prime
accused in the casewere pending, the
campus had attained normalcy. On 22
March this year, Appa Rao returned to
office and began a new saga of atrocities.
Fact-finding by the IPT

Anand Teltumbde (tanandraj@gmail.com) is a


writer and civil rights activist with the
Committee for Protection of Democratic
Rights, Mumbai.

10

The Rohith Vemula case was investigated


by a fact-finding committee of the Indian
Peoples Tribunal (IPT) comprising Justice
(retired) H Suresh; Sujatha Surepally,
editor of Desi Disa; U S Rao, Chairman,
Chaitanya Bakula Bahujan Samakhya
(CBC Federation); Meena Menon, researcher and Gayatri Singh, senior advocate
in January 2015. The committee concluded among other things that Rohiths
death was caused by various acts of
omission and commission by the university authorities. The committee directly
indicted Appa Rao for ignoring Rohiths
note of 18 December 2015 and described
it as dereliction of duty as well as grave
contempt of the orders of the High Court
of Andhra Pradesh and Telangana with
regard to the composition of committees,
etc. It also accused him of allowing the

incident of 34 August 2015 to spiral out


of control and letting his office be misused by the Minister of Human Resource
Development (HRD), Smriti Irani (now
Minister of Textiles), in order to advance
her political agenda. The recommendations of the proctorial committee were
likewise trashed by the committee as
unlawful and it found the executive
subcommittee constituted by the vice
chancellor to be incompetent. It went on
to support the JAC demand for a Rohith
Act which would contain punitive
provisions to be used against university
authorities found guilty of exclusionary
practices.
The administration backed by the
power-drunk party at the helm of course
ignored these opinions. The prime culprit
in the entire episode is Appa Rao, whose
academic reputation is sullied by multiple
charges of plagiarism and administrative
incompetence and has been arrogantly
retained like the infamous Gajendra
Chauhan of the Film and Television
Institute of India (FTII) fame. Going by
other examples too, the BJP government
prefers to demean an institution in its
fascist arrogance rather than give in to
just demands. The fact that the Hyderabad
University campus attained normalcy
during the period that Appa Rao was on
leave was an indication enough for
government action. The least the government could have done was to remove
him from his post. But instead it bared
its fascist fangs and sent him back to
unleash a further spate of atrocities.
Appa Raos Re-entry
The HRD ministry sent Appa Rao back to
the campus to resume office because it
assumed that the students would be
busy studying for their exams and may
not resist his rejoining. It also struck a
deal with the state government to
repress any resistance with brute force.
When the students learnt that Appa Rao
had rejoined and was holding a secret
meeting at his residence they rushed
there shouting slogans against him. A
huge police posse was on standby. A
scuffle broke out when the protesting
students saw members of the Akhil

JULY 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

MARGIN SPEAK

Bharatiya Vidyarthi Parishad (ABVP) with


Appa Rao and tried to rush in. The police
lathi-charged the students and even
though members of the faculty pleaded
with the police not to do so, they too
were beaten up. The police rounded up
27 agitating students, including two faculty members, put them into two buses
and kept beating them as the buses circled the outskirts of Hyderabad for hours.
No information was given about their
whereabouts until late in the evening.
They were charged under as many as 11
sections of different laws and released
on bail a week later..
After this incident the university was
transformed into a fortress and repressive
acts were unleashed against the students.
An all-India fact-finding team comprising representatives of the constituents of
the Coordination of Democratic Rights
Organisations (CDRO) investigated the
22 March incident. I was one of the
members. The CDRO managed not only
to go past the security cordon but even
interviewed Appa Rao. He was unfazed
by the incidents and ignominy the
university was incurring because of his
haughtiness. He was a mere pawn in the
political game being played by the
centre and had nothing to fear from the
public outrage. The team observed that
the incident at the vice chancellors
lodge was planned with the help of the
ABVP students. Appa Rao did not have an
explanation as to why they were allowed
entry and why the agitating students
were prevented from doing so. The
presence of the ABVP members, the team
concluded, had provoked the agitating
students into a scuffle. It was fully
exploited by the police, as per their briefing. The manner in which the police
unleashed their lathis, chasing them
into bushes and beating them could not
have been without orders from the above.

(SC/ST) Teachers Forum which described


it as an atrocity. These condemnations
however left Appa Rao and his cronies
in the administration unfazed since they
are assured of protection by the centre.
The two suspended faculty members went
on an indefinite fast outside the main
gate of the university on 14 June, and
were supported by the SC/ST Teachers
Forum and a section of students. It began
attracting huge support from other students and Dalit organisations of Telangana like the Kula Nirmulana Porata
Samiti, with every passing day. On 17
June, the SC/ST Teachers Forum and
Concerned Teachers of the University
held a protest rally in front of the administrative building in solidarity with the
fasting teachers, and demanded immediate revocation of the suspensions of
Sengupta and Ratnam. The same day,
scared by the mounting condemnation
from most political and social quarters,
obviously prompted by the HRD ministry,
the suspension order was revoked.
It is telling that the perpetrators of
atrocities on Dalitsin this case, Appa
Rao, Bandaru Dattatreya and N Susheel
Kumarwho were charged by the police
under the SC/ST Atrocity Act for abetting
the murder of Rohith Vemula, roam free
while the ones who struggle for justice
for the victim, the 25 students and two
faculty members are arrested and
punished. The background for this was
set when India inaugurated the new
genre of caste atrocities in Kilvenmani
in 1968, wherein 44 Dalits, mainly
women and children, were burnt alive
by landlords for daring to oppose them.
The struggle of the Dalits for higher
wages had resulted in the death of one
Pakkirisami Pillai, the landlords man,
for which the court convicted eight
Dalits, one for life imprisonment, another
to five years rigorous imprisonment,

three to two years rigorous imprisonment


and three others to one year of jail. All
these sentences were confirmed by the
high court. However, in the case of the
burning to death of 44 Dalits, out of the
23 accused only eight were convicted to
10 years imprisonment each by the lower
court. However, even these sentences
were quashed by the high court, which
observed that the rich Mirasdars could
not have committed such a ghastly crime.
In Rohiths case, they even stooped to
the level of questioning his caste in
order to avoid the application of the SC/
ST Atrocity Act. This seemed to suggest
that if he had not been a Dalit, the crime
would be no crime and if he had been a
Dalit, he would really get justice. There
are thousands of cases registered under
the SC/ST Atrocity Act but the conviction
rate is abysmal. Fortunately all their
tricks have failed and Rohiths Dalitness
has been established. The question is,
when will he get justice?
Mapping the Challenge
The saga of Rohiths death systematically exposes the hollowness of Indian
democracy when it comes to the struggling masses. The political culture has
been built up over the years in the name
of a republican constitution but the entire
operative mechanism of the colonial
regime which crushes the poor and marginalised with impunity, has been cleverly
retained. The current rightist regime,
with its antecedents rooted in fascist
ideology, is simply testing the limits.
Whether it is a question of decimation of
institutions that maintained the faade
of democracy, or its cultural overtures or
economic policies, it will be unscrupulous
in destroying any dissenting opinion.
The only answer to this can come from
students if they stand up and say an
emphatic no to these intrigues.

Suspension and Revocation


Appa Rao, unashamed of the public condemnation, went on the offensive. Two
faculty members, K Y Ratnam and Tathagat Sengupta were suspended, quoting
service laws. Their suspension was condemned by the University of Hyderabad
Teachers Association (UHTA) as well as
the Scheduled Caste/Scheduled Tribe
Economic & Political Weekly

EPW

JULY 9, 2016

Attention ContributorsI
The EPW has been sending reprints of articles to authors. We are now discontinuing the
practice. We will consider sending a limited number of reprints to authors located in India
when they make specific requests to us.
We will, of course, continue to send a copy of the print edition to all our authors whose
contributions appear in that particular edition.

vol lI no 28

11

COMMENTARY

The Gujarat Vote Share


Trend Conundrum
Darshan Desai

The Bharatiya Janata Party may


seem invincible in Prime Minister
Narendra Modis home state of
Gujarat. However, the staggering
numbers in terms of the partys
vote share and seats in the state
assembly tell a very different tale.
Right from the first time it came
to power on its own in 1995, till
now, this article chronicles the
BJPs eventful journey in Gujarat.

Darshan Desai (darshan207@gmail.com)


is editor, Development News Network,
Ahmedabad, Gujarat.

12

coming. There was drastic change in the


number of taluka and district panchayats
controlled by the BJP and the Congress
from 2010 to 2015. While the BJPs control
nosedived, the Congress gained substantial
control. Similarly, the BJPs vote share in
the district and taluka panchayats saw a
decrease from 2010 to 2015, while that of
the Congress increased (Table 1).
Same as in 2000, the BJP continued to
retain its hold over the semi-urban and
urban regions, winning 34 out of 56
municipalities and retaining all the six
municipal corporations to which elections
were held out of the total eight in the
state, and same as then, the victories here
too were half-truths. For instance, the
Congress put up a tough fight in the Rajkot
corporation. With a tally of 34, it managed
to scare the BJP, which won 38 seats in the
72-member corporation. In 2010, the BJP
had won 49 and the Congress won 10 in a
then 59-member corporation. Similarly in
Ahmedabad, the BJPs tally came down
from 154 in 2010 to 142 in 2015. The vote
shares in the victors urban fiefdoms too
have a story to tell. While the BJP retained
control over the 56 municipalities and
the six municipal corporations, the vote
share trend from 2010 to 2015 moved in
favour of the Congress (Table 2).
The election results portrayed an urban
rural divide almost equally bet ween the
BJP and the Congress.
The reason they were not aware of what
was in store for the party, both in 2000

t was around October 2000 when


Haren Pandya, a cabinet minister in
the Keshubhai Patel government in
Gujarat, told this writer in an interview
that it was not so much the stunning
debacle of the Bharatiya Janata Party
(BJP) in the just-concluded elections to
local self-government bodies that shocked
him and his party. What surprised them
more was that they just did not know this
was coming. With the Congress pocketing
21 out of 23 district panchayats for which
elections were held in September 2000,
leaving two to the BJP, it was a complete
reversal of the status pre-1995. Winning
2,298 taluka panchayat seats against the
BJPs 1,276 in 210 talukas of 24 districts,
the Congress had more taluka panchayat seats than the BJP did in 22 districts.
Here, too, there was a role reversal.
Even in the BJPs traditional urban
fiefdom, the party lost control of two
prestigious municipal corporations of
Ahmedabad and Rajkot after ruling for
13 years and 24 years, respectively,
though it won 227 seats, and the Congress,
193, in all the six municipal corporations.
Some detailed number crunching revealed
more eye-opening facts for the Table 1: Change in Panchayat Control for Congress and BJP,
ruling party, for instance, the 2010 and 2015
BJP, which controlled the Surat Party
2010
2015
Municipal Corporation with 98 Number of district panchayats (vote ahare [%])
1(44) 24 (47.85)
out of 99 seatsthe 99th seat Congress
Bharatiya Janata Party
30 (50.26)
6 (43.97)
having been won by a BJP
Number of taluka panchayats (vote share [%])
rebelwas reduced to 54 seats Congress
26 (42.42)
134 (46)
in 2000 though it returned to Bharatiya Janata Party
150 (48.51) 67 (42.32)
power.
Total number of district panchayats = 31
Fifteen years down the line, Total number of taluka panchayats = 230
in December 2015, the BJP, Table 2: Change in Vote Share in Municipalities and Municipal
under Chief Minister Anandiben Corporations for Congress and BJP, 2010 and 2015
2010
2015
Patel, similarly lost most of the Party
Vote share (%) in 56 municipalities
district panchayats, a majority of Congress
29.59
39.59
taluka panchayats, and several Bharatiya Janata Party
47.77
44.67
municipalities. Once again, the Vote share (%) in six municipal corporations
33
41.12
results shocked the party, more Congress
51.68
50.13
so for they did not know this was Bharatiya Janata Party
july 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

COMMENTARY

as well as in 2015, is the same. Inebriated


in unbridled power with an opposition
party in deep slumber, the BJP leadership had never had its ear to the ground.
Disconnect with Grass Roots
In 2015, the Anandiben Patel-led BJP
went to the hustings against the backdrop of the partys unprecedented 26of-26 Lok Sabha triumph in 2014, which
sent the then Chief Minister Narendra
Modi to Delhi. Besides the Lok Sabha
win, all the previous assembly and local
body elections in the state under Modi
saw the BJP dancing all the way to victory.
There was an air of nonchalance in the
party leadership given the strong platform left for them by Modi, while the
only fact that had them nervous was the
Patidar agitation, which started in July
2015, for reservations under the Other
Backward Class (OBC) quota.
The very community, Patels or Patidars,
on whose shoulders the BJP rode piggyback through the decades was asking for
its share in the spoils of power. This left the
government in a quandary, since facilitating the Patels, who form around 14%
of the states population, would mean
cutting into 27% of the OBC quota, 7% of
Scheduled Castes (SCs) quota and 15% of
the Scheduled Tribes (STs) quota. With a
50% cap on reservations imposed by the
Supreme Court, any more quotas would
eat into the share of others. Ruffling the
OBCs, SCs and STs in Gujarat would be
committing political hara-kiri since they
are an integral part of the Congresss KHAM
caste combination of Kshatriyas, Harijans,
Adivasis and Muslims, who constitute
75% of the states population. With the
Patel agitation, a counter-consolidation
of these communities has already taken
place under the banner of OBC, SC, and
ST (OSS) Ekta Manch.
Unable to come up with a proper response to the Patidar storm, the Anandiben Patel government made the mistake
of unleashing the police force on the agitators after a five lakh-strong rally was
addressed by young Patel leader Hardik
Patel in August 2015 in Ahmedabad,
months ahead of the local body elections
in November and December. As many as
10 people were killed, while an aggressive police force lodged over 450 first
Economic & Political Weekly

EPW

july 9, 2016

information reports (FIRs) against nearly


1,500 agitating Patels between August
25 and August 28. After this, the leaders
of the Patidar Anamat Andolan Samiti,
led by Hardik Patel, intensified the
agitation that had already spread across
the state. The government went a step
further and jailed Hardik Patel and other
community leaders on charges of sedition,
among others. This cost the BJP heavily
in the local body elections where Patels
reportedly voted aggressively against the
ruling party, especially in the Saurashtra
and North Gujarat regions.
While it has been 10 months of
22-year-old Hardik Patel languishing in
jail, the government last month announced
a 10% reservation for economically weaker
sections with an annual income of `6 lakh
or less among the higher castes, including
Patels. Albeit, implementation of this is
fraught with legal hurdles since there is
a 50% cap on reservations.
With the setting in which the party
ruled Gujarat since 1998romping home
to power a second time with 117 seats in
a state assembly of 182, despite its first
121-seat victory of 1995 having been badly
squandered away by a split in the party
its leaders construed there was no challenge ahead since the voters had so faithfully entrusted them with a veritable
power of attorney.
It is against this backdrop that the
ruling BJP faced the first election to the
local bodies in 2000 and the results dealt
them a heavy blow from the grass roots,
the rural hinterlands, while the partys
urban strongholds managed to hold on
with difficulty. The results reflected that
the party was increasingly getting detached from the ground, in a state of unchallenged inebriation and, therefore,
arrogance. This is exactly what Haren
Pandya meant. (He was mysteriously
assassinated three years later; nobody
knows by whom and for what.) The partys disconnect with the grass roots in
2000 could also be understood from the
fact that when this writer asked them for
the results of the local body elections, a
party functionary said, We may not
have it, this is 2016 now, why do you
want the 2000 information? The party
office had not kept any records. Checking with the Congress was out of the

vol lI no 28

question; it may not have even the 2015


results handy.
Keshubhai Patels Regime
It was in March 1995 that the first BJP
government took root in Gujarat, with
121 seats against the Congresss 45, riding
on a palpable anti-incumbency wave
against the previous Congress government, as well as on the lurking Hindutva
sentiment that originated three years
earlier, in the demolition of the Babri
Masjid in December 1992. When Prime
Minister P V Narasimha Rao dismissed
BJP governments in some states, the BJP
pulled out from a coalition government
it ran since 1990 with the Janata Dal
Gujarat (JDG) of Chimanbhai Patel.
Later, the opportunistic JDG merged
with the Congress, with Chimanbhai
continuing as the chief minister.
After Chimanbhais death in 1994, the
baton was passed on to Chhabildas Mehta.
It did not work and the BJP romped home
with veteran leader and Patidar community patriarch Keshubhai Patel being made
the chief minister of a popularly elected
government. A revolt in the party just
over six months later led to the fall of the
government, though the dispensation
later formed by the partys rebels with
Congresss external support did not last
long, forcing an election in the state in
1998. The sympathy factor with the then
Chief Minister Keshubhai Patel for being
toppled and the continuation of the pre1995 anti-incumbency sentiment against
the Congress gave Keshubhai and the
BJP a second victory in 1998.
This went to their head. Since he
assumed the chief ministership the second
time, Keshubhai returned with a vengeance for the 1995 revolt and rode roughshod over Sangh Parivar outfits like the
Rashtriya Swayamsevak Sangh (RSS),
the Vishva Hindu Parishad and even the
Swadeshi Jagran Manch. None of them
worked for the party in the 2000 local
body elections, and it had to pay a very
heavy price for this. Keshubhai Patel had
also ensured that a key poll strategist and
the then state party general secretary
Narendra Modi was thrown out of Gujarat,
to Delhi, since he held Modi responsible
for the 1995 revolt against him by
party strongman Shankersinh Vaghela.
13

COMMENTARY

A suggestion was made to request the


central leadership to ask Modi to return
temporarily to run the election machinery,
but Keshubhai Patel thwarted it. After the
2000 poll debacle, the requests turned
into demands from the party rank and
file to bring Modi back to Gujarat. This,
albeit, did not materialise.
The other important reason for the 2000
poll debacle was the Keshubhai Patel
governments inept handling of five natural calamities: two cyclones, a series of
tremors in the coastal regions around
Bhavnagar, and two severe droughts. Just
like the chorus for Anandiben Patels
head after the partys debacle in the local
body elections in December 2015, there
was a more vocal clamour for replacing
Keshubhai Patel following the similar
electoral disaster in October 2000.
The situation was only to worsen for the
party and the Keshubhai Patel regime after
the massive earthquake on 26 January
2001, which shook the entire state. The
government fell miserably short in
handling the scale of the crisis when
thousands of people were killed and lakhs
of houses were reduced to rubble.
Enter Modi
With a high decibel media tirade and
public outcry against the government,
the party finally gave in and sacked
Keshubhai to bring Narendra Modi back
to Gujarat on 7 October 2001. In a first, a
pracharak of the RSS had assumed the
charge of chief minister of the state. But,
despite a new chief minister in place, the
anti-incumbency sentiment against the
BJP government had sustained and this
was reflected in the by-elections for three
assembly seats of Sayajiganj (an-out-and
out urban area), Mahuva in South Gujarat
(an Adivasi reserved seat) and RajkotII
(contested in by Narendra Modi).
The BJP lost both Sayajiganj and
Mahuva, while the winning margin in
RajkotII came down to half of what the
incumbent Vajubhai Vala had got, despite the sitting chief minister contesting
from there. Vala had vacated the seat for
Modi after cabinet minister Haren Pandya refused to make way for Modi in his
constituency, Ellis Bridge in Ahmedabad,
which was Modis first choice. Smarting
under this insult, Modi ensured Pandya
14

was not given a ticket to contest from the


constituency in the December 2002 elections. Three months after this, in March
2003, Pandya was assassinated.
The uninspiring February 2002 byelection results came only three days
ahead of the Godhra and post-Godhra
communal holocaust in Gujarat that left
1,100 people dead, but paved the way for
Modi and the BJP to bounce back to invincible political reckoning riding on the
Hindutva rhetoric. The party returned
to power in December 2002 with an
enviable victory, bagging 127 seats in an
assembly of 182 seats, while the Congress managed 51. Amidst a Hindutva
wave then, the BJPs vote share jumped
to a whopping 49.85%, from 42.45%
when the party formed the government
for the first time in Gujarat in 1995, and
to 44.81% in 1998 when the assembly
and the Lok Sabha elections were held
together. If the BJPs vote share skyrocketed in the 2002 polls, the Congresss
vote share too increased to 39.45% in a
communally polarised atmosphere.
After 2002, the BJPs vote share and
the number of seats it has in the state
assembly have been steadily falling,
while the difference in the vote shares
between the BJP and the Congress has
been shrinking simultaneously (Table 3).
However, when the people of Gujarat
voted to make Modi the Prime Minister
during the Lok Sabha elections in 2014,
the BJP won all the 26 seats and its vote
share rose (Table 4).
On a Downhill Trip
Between 2000 and 2015, as reflected by
the results of the local body elections of
both the years, the BJP has always been on
a downhill trip in Gujarat, except when it
seeks votes from a communally divided
Table 3: Seats Won by Congress and BJP in Gujarat
Assembly, 2002, 2007 and 2012
Party

Number of Seats Won in State Assembly


(Vote Share [%])
2002
2007
2012

Congress
Bharatiya Janata Party

51 (39.45) 59 (39.63) 61 (38.9)


127 (49.85) 117 (49.12) 115 (47.9)

Table 4: Lok Sabha Seats from Gujarat Won by


Congress and BJP, 2009 and 2014
Party

Congress
Bharatiya Janata Party

Number of Lok Sabha Seats Won


(Vote Share [%])
2009
2014

11 (43.2)
15 (46.5)

0 (32.9)
26 (59.1)

platform as in 2002 and for a high-stakes


election like in 2014. For the BJP voter in
Gujarat, it is Narendra Modi first and then
the party, as if both are separate entities.
With Modi not around, there has been a
revival of internal wrangling in the BJP
with what has come to be identified as
the Amit Shah group lording over the
party organisation as well as the government run by his bitter rival Anandiben
Patel. The striking example of this was
the announcement of 10% reservation
for economically weaker sections, which
was neither made by the chief minister
nor was it made from the state secretariat.
The announcement was made by
newly appointed state BJP president, Vijay
Rupani, from the party headquarters,
Kamalam, near Gandhinagar, following
a meeting presided over by the national
BJP president. Sitting meekly besides
him, the chief minister only looked on.
Ironically, Rupani is a minister under
Anandiben Patel. Believed to be in the
Amit Shah camp, Rupani was appointed
the state BJP chief at the cost of several
senior leaders and former ministers being ignored, though, compared to them,
he has no real experience of chalking
out a statewide election strategy.
Citing the governments inept handling
of the Patidar agitation that has estranged
the community critical to the party for
several decades, the supporters of Amit
Shahhimself a chief ministerial aspiranthave been clamouring for Anandiben
Patels head. They want her to be out at
least a year before the December 2017
elections. But, true to his style, Modi has
kept the cards close to his chest given
that both Anandiben Patel and Shah
owe allegiance to him and are what they
are thanks to Modi.
There is clear evidence in any case that
the public mood in Gujarat is palpably
against the Anandiben Patel government.
The Patels, the key community to which
the chief minister and several top ministers
belong, have for the first time in the
states political history turned against
the BJP as was shown in the results of the
local body elections in December 2015.
The stress in the agricultural sector
thanks to the governments apathy towards the farmers through its policy of
crony capitalism, ushered in by Modi

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and continued thereafteris a key reason for the Patidar agitation. This is also
why the BJP fared miserably in the rural
hinterlands in the local body elections.
This is besides the stagnation in Gujarats
traditional small-scale and medium-scale
industrial sector, on which the states
famed entrepreneur depends heavily.
Still, the biggest advantage that the
BJP has ahead of the 2017 elections is the
opposition, the Congress, which is in a
state of disarray. The partys good showing in the recent elections is largely by

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EPW

july 9, 2016

default of an anti-BJP vote, while on its


own the Congress has as many factions
as it has leaders; every leader is a chief
ministerial candidate. The party has not
been able to put together a single public
movement against the government or raise
any issue of public import. For instance,
two movements in Saurashtra and north
Gujarat against allocation of agricultural
lands to the corporate sector were led by
farmer organisations and the Congress
only made vain attempts to join them
much later. The only thing that the party

vol lI no 28

does with religious regularity is to issue


press releases criticising the government.
In all, though the BJP seems to be getting weaker in Gujarat, as was reflected
in its deteriorating vote share and the
number of seats, it still is not enough to
make way for the Congress to come to
power. The BJP has Modi, whose forays
into Gujarat during crunch situations
ahead of the 2017 assembly elections can
help turn the tide in the partys favour,
while the Congress opposition has nobody within the state as well as outside.

15

COMMENTARY

e-Platform for National


Agricultural Market
Ramesh Chand

Agricultural markets are


characterised by poor
competitiveness, fragmentation,
inefficiency, presence of excessive
middlemen, and frequent price
manipulations. The electronic
trading portal for national
agricultural market is an attempt
to use modern technology for
transforming the system of
agricultural marketing.

Views are personal.


Ramesh Chand (rcncap@gmail.com) is with
NITI Aayog, Government of India.
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ince the launch of the economic


reforms in 1991, the disparity between growth rates of output in
agriculture and non-agriculture sectors
has risen sharply. The average annual
growth rate for five years in agriculture
hovered around a long-term growth trend
of 3% whereas growth rate of non-agriculture sector increased steadily from
around 6% during the early 1990s to
10% during 200405 to 200809, and
7.5% during the recent five years. An important reason for this is that the price
incentive offered by the agricultural market in the country did not improve, as
these markets remained fragmented,
inefficient and dominated by low scale
and multiple middlemen.
It is observed that after implementation of the Agricultural Produce Marketing (Regulation) Act (APMRA) in various
states during 1960s and 1970s, no major
reform in the agricultural market has
been implemented (Chand 2012). The
APMRA brought radical changes and
significant improvement in almost all
aspects of marketing of farm produce
(Acharya 2004). This has been a major
driving force behind the achievements
of the Green Revolution phase. However, many gains brought by APMRA to
improve competitiveness of agricultural
markets got diluted over time and

vol lI no 28

market infrastructure did not keep pace


with volume of market arrivals. The
facilities provided in markets remained
not only inadequate, but also deteriorated in many cases. Excessive intermediation worked to the disadvantage of
producers and consumers, and favoured
only middlemen.
Also, over time, macro environment
changed considerably, particularly after
1991. The country liberalised its external
trade initially as a part of domestic policy
reforms, and then to meet the requirement
of the 1995 World Trade Organization
(WTO) agreement and to adjust to it. This
external liberalisation exposed Indian
agriculture to international competition,
which necessitated internal liberalisation
of agriculture trade to improve domestic
competitiveness. The reforms also led to
profound changes in trade and commerce
in the non-agriculture sector. All these
factors put lot of pressure,towards late
1990s, to bring reforms in agriculture
markets in the country.
Attempt to Reform Market
In response to the changes in trading
environment during 1990s, the union
government brought a series of reforms
in quick succession, beginning from
2002. These included the Removal of
(Licensing Requirements, Stock Limits
and Movement Restrictions) on Specified
Foodstuffs Order, 2002 and 2003. As per
this order, wheat, paddy/rice, coarsegrains, sugar, edible oilseeds and edible
oils, pulses, gur, wheat products and
hydrogenated vegetable oil or vanaspati
were removed from the list of Essential
Commodities Act (1955) and thereafter,
15

COMMENTARY

a permit or licence was not required for


their trading, storage and movement.
Further, the prohibition on futures trading in agricultural commodities was
removed in 2003.
These were important reforms but they
did not include reforms in agricultural
marketing or transactions of farmers
produce. One reason for this was that
agricultural marketing is a state subject,
that is, it required reform by respective
states. However, the central government
initiated several measures to bring reforms
in the system of agricultural market in
states. The first major step in this direction
was appointing an Expert Committee
on 19 December 2000, by Ministry of
Agriculture, Government of India (GoI)
to review the present system of agricultural marketing in the country and to
recommend measures to make the system
more efficient and competitive.
The committee submitted its report on
29 June 2001, suggesting various legislative reforms as well as the reorientation
of the policies and programmes for the
development and strengthening of agricultural marketing in the country. The
committee noted that there were stringent
controls on the storage and movement of
several agricultural commodities. These
restrictions were acting as a disincentive
to farmers, trade and industries.
It was suggested that legal reforms
can play an important role in making
the present marketing system more
effective and efficient by removing unnecessary restrictions and by establishing a sound framework to reduce uncertainty of the markets. The State Agricultural Produce Marketing Regulations
Act and the Essential Commodities Act
were the two important legislations
that had to be amended to remove restrictive provisions coming in the way
of an efficient and competitive marketing system. Alongside, there was a need
to introduce through appropriate legal
change, a negotiable warehousing receipt system in the country for agricultural commodities to enhance institutional lending to the agricultural marketing sector, and to improve price-risk
management (GoI 2002).
To take the recommendations of the
expert committee further, the Ministry
16

of Agriculture constituted an interministerial task force on 4 July 2001. The


task force submitted its report in May
2002. The recommendations contained
in these reports were discussed at the
national conference of state ministers
organised by the Ministry of Agriculture
on 27 September 2002, and later by a
standing committee of state ministers
constituted for the purpose under the
chairmanship of Hukmdev Narayan
Yadav, Union Minister of State for Agriculture, on 29 January 2003. The Ministry
of Agriculture accordingly set up a
committee under the chairmanship of
K M Sahni, additional secretary, Department of Agriculture and Cooperation, to
formulate a model law on agricultural
marketing in consultation with the states.
The committee drafted and finalised the
model legislation after holding discussions with the state officials (GoI 2003).
The model act called the State Agricultural Produce Marketing (Development
and Regulation) Act, 2003, was then
shared with all the states for implementation. Some important provisions of the
model act are: (i) more than one market
can be established by private persons,
farmers, cooperatives and consumers in
a market area; (ii) there will be no compulsion on the growers to sell their produce through existing markets administered by the Agricultural Produce Market
Committee (APMC); (iii) a new chapter
on contract farming was added to facilitate
and promote smooth progress in contract
farming; (iv) provision made for the direct
sale of farm produce to contract farming
sponsor from farmers field without the
necessity of routing it through notified
markets; (v) provision made for imposition of single point levy of market fee on
the sale of notified agricultural commodities in any market area and discretion provided to the state governments
to fix graded levy of market fee on different types of sales; (vi) registration for
market functionaries provided to operate
in one or more than one market areas; and
(vii) provision made for the purchase of
agricultural produce through private
yards or directly from agriculturists in
one or more than one market area.
National level meetings were organised
with the state governments and follow-up

letters were sent from union agriculture


minister to the state ministers in-charge
of agricultural marketing for amending
the APMC Act on 16 July 2004 and again
on February 2005 and to the chief ministers on 25 May 2005. To incentivise
states to amend the APMC Act on the
lines of the model act, some investment
subsidy on market infrastructure development projects was also provided under central assistance.
As per the recent information, majority
of the states reported that they have
adopted key area of reforms as suggested
in the model act. However, the ground
reality has been that except in states like
Karnataka, various reforms have been
considerably diluted and only partly
implemented at the state level. In some
cases, new conditions were attached to
reforms which defeated the very goal of
reforms. The central government order
2002 which liberalised trade in agricultural commodities was put in abeyance
by various central government orders
during 200608. Thus, licensing requirements, stock limits and movement restrictions in respect of purchase, sale, supply,
distribution or storage for sale of agricultural commodities, which were removed
in 2002, were brought back.
In the meantime, unorganised functionaries like commission agents and
traders organised themselves and successfully thwarted attempts to change
market rules and practices. The net
result has been that persistent efforts
for nearly one and a half decades, to
reform markets, remained more or less
unsuccessful.
Market Models in Karnataka
Among various states of the country,
Karnataka has been the forerunner in
market reforms and in devising innovative practices to improve agricultural
markets and competitiveness. The state
was first in implementing Model APMC
Act and it has been piloting new practices
on its own. In order to take advantage of
modern technology to improve agricultural marketing, the state prepared a plan
in 201213 with the assistance of NCDEX
(National Commodity and Derivatives
Exchange) Spot Exchange for automation
of auction process in mandis (primary

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agricultural markets where producers


sell their agricultural produce).
The plan involves creation of transparent, integrated e-trading mechanism
coupled with facilities for grading and
standardisation to facilitate seamless trading across mandis (APMCs). The approach
was to integrate all such APMCs with major
consumption market to fetch remunerative prices to farmers. The plan has been
implemented through Rashtriya e-Market
Services (ReMS) Private Limited Company,
which is a joint venture created by the
state government and NCDEX Spot Exchange. ReMS offers automated auction
and post-auction facilities (weighing, invoicing, market fee collection, accounting), assaying facilities in the markets,
facilitation of warehouse-based sale of
produce, commodity funding and price
dissemination. NCDEX is also implementing a unified market platform, whereby
all mandis in the state are being unified
for single trading.
The unified online agricultural market
initiative was launched in Karnataka on
22 February 2014. A total of 105 markets
spread across 27 districts have been
brought under the Unified Market Platform (UMP) as of March 2016. Under this
initiative, every farmer who brings produce to the APMC market is given an
identification number for the lot brought
into the mandi. The farmer has a choice
to use the common platform or the platform of commission agent for auction of
the produce. These lots are then assayed
and information about quantity and
quality is put on the portal of ReMS.
Buyers or traders who want to buy
produce from the farmers are required to
get the unified market licence, register
themselves with ReMS by paying nominal
fee, and are required to keep some security in the bank. Each trader is given a
username and password. Any prospective buyer can bid for the produce online
from anywhere using her/his username
and password. A trader can revise the bid
upward any number of times before closure of the bidding time. After closure of
auction period, the bids are flashed on
television screens put up in the mandis
and on the portal of ReMS. Thereafter, the
producer/seller is required to give his
acceptance for the bid. A seller has the
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right to reject the bid, in which case a


second round of bidding takes place on
the same day and in the same way. A
bidder is required to keep a pre-bid margin
of 5% of value of the lot marked for sale
with ReMS before opening of the tender.
ReMS charges 0.2% of the value of the
transacted produce for providing various online services.
Participation in UMP is not restricted
to Karnataka. Traders from other states
and bulk institutional buyers such as
Cargill, ITC, Reliance, Metro Cash &
Carry are also registered with ReMS.
The UMP received overwhelming response from farmers in the state and it
shows impressive results in a short period.
Auction and sale of farm produce is not
restricted to traders within the market.
Thus, the possibility of tacit understanding
to suppress prices received by farmers or
cartelisation has been eliminated. Price
discovery is competitive, transparent
and efficient. Farmers have also started
selling online, enabling farmers to have
much higher prices and removing many
middlemen.
Adopting Karnataka Model
The success of UMP in Karnataka got
countrywide attention and some states like
Andhra Pradesh, Telangana, Maharashtra
and Gujarat have already started adopting the Karnataka model. Impressed by
the success of UMP in Karnataka, the union government took initiative to encourage other states to adopt e-trading platform for agricultural commodities.
The Cabinet Committee on Economic
Affairs approved the central sector scheme
for promotion on the national agriculture
market through Agritech Infrastructure
Fund with a budget allocation of `200
crore on 1 July 2015. The scheme entails
setting up of a common e-platform in
585 selected wholesale regulated markets across the country. The central government will provide the software free
of cost to the states along with `30 lakh
per mandi for setting up the hardware
and related equipment/infrastructure.
It envisages to expand Karnatakas UMP
model at the national level in a bid to
cover the entire country.
To give real push to this move, Prime
Minister Narendra Modi has launched

vol lI no 28

the electronic trading platform for


National Agriculture Market (e-NAM) on
14 April 2016. In its first phase, the initiative will cover 21 mandis from eight
states, namely, Gujarat, Telangana, Rajasthan, Madhya Pradesh, Uttar Pradesh,
Haryana, Jharkhand and Himachal
Pradesh. Further, 25 crops, including
wheat, maize, pulses, oilseeds, potatoes, onions and spices have been included for trading on the platform. It is
proposed that 585 markets across the
country will be brought on the platform
by March 2018.
It is pertinent to mention that for integration with the e-platform, the states/
union territories will need to undertake
three reforms, namely: (i) a single licence
to be valid across the state, (ii) single
point levy of market fee, and (iii) provision for electronic auction as a mode for
price discovery.
Anticipated Benefits
Despite a lot of persuasion by the central
governments for several years, most of
the states either did not adopt the model
APMC Act or adopted it in a much diluted
form. Further, the model APMC did not
have provision to create a national market
or even state level common market. The
NAM initiative with electronic trading
platform, linking major national markets, will take Indias agricultural marketing system to a higher level besides
addressing some of the issues that were
to be addressed by the model APMC Act.
It will operate in the same way as ReMS
is operating in Karnataka.
It seems this initiative will prove to be
a game changer for Indias farmers and
agriculture sector, if it is implemented in
true spirit. It can offer large direct and
indirect benefits to the sector and the
economy. The direct benefits include:
(i) improvement in competitiveness and
efficiency in agricultural markets, (ii) elimination of traders cartels and price
manipulations by local trading groups, and
(iii) lower price spread between producers
and consumers as well as surplus and
deficit states. Producers will get better
price realisation, while consumers can
expect benefit from the lower price spread.
Better price realisation for farmers
will serve as an important incentive for
17

COMMENTARY

raising productivity and production,


and in turn lead to higher growth of
output. In many states, farm harvest
prices prevail below the minimum support price (MSP) in the harvest period
and shoot up subsequently. e-NAM will
help check such market imperfections.
Some states like Punjab and Haryana
desperately need diversification in crop
pattern away from paddywheat rotation. However, this has not been happening due to unattractive market for
alternative crops. e-NAM is expected to
promote market- driven diversification
and reduce dependence of farmers in
these states on MSP and public procurement. Any state that chooses to remain
outside e-NAM under pressure from
vested interests of market middlemen
or due to consideration of loss to revenue from mandi taxes, will be depriving
its farming community of benefit of
competitive market.
The success of e-NAM in improving
competitiveness and integrating panIndia markets will require assaying facilities created in various markets to ascertain quality traits as quality variations are
quite large in agricultural commodities.
Also, each mandi will require forwarding

18

agents to handle the produce for buyers


from outside the mandi.
Concluding Remarks
Though e-NAM will improve competitiveness in market through larger participation of buyers and more transparent system of bidding, it should not be
considered a panacea for all deficiencies
in agricultural markets. e-NAM necessitates some reforms proposed in model
APMC Act whereas it will not address
some vital issues having bearing on conduct and performance of market.
The four important areas for reforms,
which are not part of e-NAM, are as
follows: (i) direct sale by farmers to
buyers, processors, or, contract marketing without bringing produce to mandi;
(ii) establishment of private markets
with treatment at par with APMC. Even
under e-NAM, market committee will
continue to hold its monopoly power in
terms of offering a platform for sale/
purchase; (iii) removal of legal barriers
to entry of organised and modern capital and investments into agricultural
marketing. This will require tweaking
Essential Commodities Act to draw
distinction between genuine service

providers and black marketers/hoarders;


and (iv) rationalisation of market fee,
commission charges, cess and taxes and
development charges. State after state
has been raising taxes and development
charges to mobilise more revenue from
mandis, particularly in the cases
where central agencies are procuring
the produce.
The full benefit from linking agricultural markets in the country and putting
them on electronic platform will come
when a single trading licence is valid
across the country and when a farmer
gets the option to sell her/his produce in
any market throughout the country.
References
Acharya, S S (2004): State of the Indian Farmer: A
Millennium Study, Agricultural Marketing, Department of Agricultural and Cooperation,
Ministry of Agriculture, Government of India,
and Academic Foundation.
Chand, Ramesh (2012): Development Policies and
Agricultural Markets, Economic & Political
Weekly, Vol 47, No 52, pp 5363.
GOI (2002): Report of Inter-Ministerial Task Force
on Agricultural Marketing Reforms, Department of Agriculture and Cooperation, Ministry
of Agriculture, Government of India.
(2003): Model Act, the State Agricultural Produce Marketing (Development and Regulation
Act, 2003), Department of Agriculture and
Cooperation, Ministry of Agriculture, Government of India, New Delhi, 9 September.

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Not in Peoples Interest


Sugata Marjit

The politics and economics of


interest rate formation in this
country must be studied carefully.
Lowering the interest rate raises
stock prices in an environment
where they themselves
cannot move up thanks to the
fundamentals of the economy
that are not conducive.

Sugata Marjit (marjit@gmail.com) is at the


Centre for Studies in Social Sciences, Kolkata.

18

conomic laws and principles are


not bound to be people-friendly, but
on many occasions the right kind of
economics tends to help masses. A decline
in the interest rate on fixed deposits in
banks, justified in the face of a declining
inflation rate and perennially desired by
the government as necessary to promote
investment, is clearly anti-people, even if
supported by apparently good economic
logic. Since the countrys central bank is
not in the business of assessing peoples
welfare and is guided by sound economic
logic, the government should have taken
initiative to provide a broader picture of
reality and the associated good economics.
Unfortunately for the people, whose
living conditions are entirely dependent

on small amounts of saving and are


frightened to invest in the stock market
or any other avenues of investment because of their incapacity to undertake
risk, the cutback in interest rates spells
disaster. But given the close connections
between the media and the lobbies that
are continuously after a reduction in
interest rates, the affected voices are not
allowed to be heard, and the government
fails to provide them the dignity they
deserve. In this brief note, I am going to
talk about only economics that is being
ignored or not highlighted because of
different kinds of vested interests.
We know from the interest rate parity
condition that the differences in the interest rates between countries must be
explained by expected depreciation in
the exchange rate, translated as inflation rate with some assumptions on purchasing power parity conditions and a
risk premium beyond fluctuation in prices.
Hence, cross-country differences must

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be based on a good measure of risk


premium. I am sure economists at the
Reserve Bank of India (RBI) have done
the necessary calculations and have reason to tag the interest rate solely on the
inflation rate. I do not know whether
economists at the RBI have calculated
the long-run real rate of interest rates for
the world and for India. To a common
man, the movement in the cost-of-living
index is the number to focus on, and its
rate of increase has to be subtracted
from the fixed deposit rates to check the
real interest rate we receive. There have
been occasions in the past when real
rates of interest declined and lenders
have lost out. When real rates rise, lenders
must be allowed some time to recover
that loss. Do we have a mechanism for
that? We do not.
Passing the Burden
Banks are happy if they have to pay
less to the depositors, particularly when
the level of non-performing assets
(NPA s) has skyrocketed. Such unrealised interest earnings is putting pressure on them precisely because many
big shots have not paid back their loans,
which includes those who are gung-ho
regarding a cut in the borrowing rate.
Are we not passing the burden of adjustment from crooks to small lenders by
reducting the deposit rate? We hardly
see any discussion on such a general
equilibrium link.
Many countries in Europe and even
the United States, though to a lesser
extent, have strong social security provisions that help retired people and guarantee basic social protection for everyone. We do not have such a system.
Hence the lending rate should have a
premium over risk and inflation-adjusted
global rates to help small and medium
lenders. This point is missed by erudite
policymakers. The policy failure of the
government must not be camouflaged
by sound economics.
In an earlier article in this weekly
(The Interest Rate Affair, EPW, 4 April
2015), I have tried to draw attention to
the conventional wisdom that a decline
in the interest rate hardly stimulates
long-term investment in India by drawing on basic textbook result and research
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by RBI economists. As a matter of fact


such a relationship is a myth anywhere
in the world, as long-term expectations
of aggregate demand as well as public
investment in infrastructure are far more
critical factors in promoting investment.
Has the government published a white
paper worthy of publication in a top
international journal on how the interest rate affects investment in the country, and have established a solid link
between a decline in the interest rate
and an increase in the rate of investment? We are yet to see one, while the
poor lender has to be made the scapegoat of bad economics.
The decline in the borrowing rate will
stimulate housing and car markets by
creating demand for them, but would
definitely increase profits even if there is
no change in demand. Therefore, a
sound policy will be to impose an extra
profit tax on pre-existing sales, and to
redistribute it as an interest subsidy to
small lenders. If 100 cars were sold
before and now it becomes 120, why
should the firm get the benefit of a lower
interest cost on all the 120 units. They
must be taxed for the first 100 units. In
fact the whole hue and cry for a drop is

guided mostly by profit motive, the issue


of investment may be an excuse. The
nation would also like to know to what
extent housing and car markets have
contributed to the overall growth and
welfare for the country.
The politics and economics of interest
rate formation in this country must be
studied carefully. Lowering interest rate
raises stock prices in an environment
where they themselves cannot move up
thanks to fundamentals of the economy
that are not conducive. It increases profits
for those who have no inclination to
spend extra for investment. It helps
those who do not pay back loans, and
taxes those who lend money to them. A
lower interest rate on deposits in the
banks is simply a tax on poor people. It
goes without saying that nationalised
banks, the major source of financing of
business in this country, channelise
funds of the poor to the rich. This has to
be the outcome in an imperfect credit
market where becoming a legitimate
entrepreneur requires someone to be
relatively affluent. The political implications of treating lenders as the children
of a lesser god may not be as benign as
thought by many.

Journal Rank of EPW


Economic & Political Weekly is indexed on Scopus, the largest abstract and citation database
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Scopus has indexed research papers that have been published in EPW from 2008 onwards.
The Scopus database journal ranks country-wise and journal-wise. It provides three broad sets
of rankings: (i) Number of Citations, (ii) H-Index and (iii) SCImago Journal and Country Rank.
Presented below are EPWs ranks in 2014 in India, Asia and globally, according to the total
cites (3 years) indicator.

Highest among 36 Indian social science journals and highest among 159 social science
journals ranked in Asia.

Highest among 36 journals in the category, Economics, Econometrics and Finance in the
Asia region, and 36th among 835 journals globally.

Highest among 23 journals in the category, Sociology and Political Science in the Asia
region, and 15th among 928 journals globally.

Between 2008 and 2014, EPWs citations in three categories (Economics, Econometrics,
and Finance; Political Science and International Relations; and Sociology and Political
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vol lI no 28

19

COMMENTARY

From Great Britain to Little


England, via Brexit
Radha DSouza

The Brexit referendum was called


effectively to settle an inner-party
struggle within the conservative
Tory party. The struggle in the
Tory party signifies deep divisions
within the ruling elite and the
state. The Brexit vote and the
victory of the nationalist strand
in Toryism present the spectre
of disintegration of the
United Kingdom.

oebbels must be laughing in his


grave, I texted on the morning
of 24 June 2016 as I woke to
news of Brexit victory. The leave and
the remain camps, the pundits, politicians and public woke up shocked and
stunned. The leave camp did not expect to
win, and the remain camp did not expect
to lose. All sides lied, some more than
others. Indeed the campaign was a competition on misinformation. Everyone
knew that all sides were lying.
The remain side unleashed Demon
Fear and the leave side let loose Demon
Racial Bigotry. For the leave side, immigration and the National Health Service
(NHS) were pivotal issues, their arguments
cloaked in jingoistic nationalism. The
immigrants were somehow responsible
for Little Englands problems, including the
crisis in the NHS. The remain camp chanted
the same mantra: market access, investments, and growth that came with European Union (EU) membership would fix
the problems that people of the United
Kingdom (UK) have reeled under for four
decades since Margaret Thatcher began
rolling back the state, privatising Britain
and liberalising the markets. Wealth
polarisation, regional disparities, falling
wages and unravelling health, education
and social services across England make
London feel and look like a different
country. In the end those who lied best,
unleashed the worst demons, won.
The Morning After

This article was earlier posted in the


Web Exclusives section of the EPW website.
Radha DSouza (R.Dsouza1@westminster.ac.uk) is
with the School of Law, University of
Westminster, London, UK.

20

The morning after the dark night, the


leave campaign admitted to lying surprisingly quickly, I suspect partly because
with the shock of winning, it dawned on
them that they would have to deliver on
their lies. Central to the campaign was the
claim that by leaving the EU there would
be 350 million savings available to invest
in the NHS. Hours after the referendum
results, Nigel Farage, leader of the far
right UK Independence Party (UKIP),

confessed the figures were wrong and


the claims should not have been made by
the leave camp. Boris Johnson, the conservative leader heading the leave campaign, admitted that immigration could
not be brought down after all, and that
the EU would continue to remain at the
heart of British economy and society.
Scotland and Ireland voted to remain.
All of England barring London voted to
leave. Wales, Englands poor cousin, voted
to leave and realised that the significant
subsidies they received from the EU
might be in jeopardy. So did Cornwall and
other regions. The morning after, both
regions wanted assurance from Little
England-to-be that their subsidies should
be protected. The pundits had a field day
on 24 June analysing the votes, the differences between the four nations of the
UK, rich and poor, old and young, regional
disparities, and above all the yawning
gaps between the political, economic
and intellectual elite, and the people.
Conservatives:
Natural Right to Rule
The Brexit referendum was called effectively to settle an inner-party struggle
within the conservative Tory party. The
divisions in the Tory party signify deep
divisions within the ruling elite and the
state. Like with states under communist
party rule, the history of what I shall call
neo-aristocratic democracy in Britain is
riddled with periodic inner-party struggles
within the Tory party whenever the state is
in crisis and divisions appear among the
ruling elite. What Neville Chamberlain,
Margaret Thatcher, David Cameron have
in common is that their own party
brought them down when the country was
in crisis and the elite were deeply divided.
The Tories are not just any other political party. They are an institution in Britain with a history that parallels the rise
of modern Britain, going back to 1678.
The Tories have overseen the transformation of the Kingdom of England into
the Kingdom of Great Britain and later
the United Kingdom of Great Britain and
Ireland, the dissolution of the British
Empire, and are now poised to oversee the
possible dissolution of the UK. The historical embeddedness of the Tories in
British history throws light on how another

july 9, 2016

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inner-party struggle has dragged Britain


into a rocky and uncertain future.
Unlike France, Russia, and other
European countries, Britain never had a
proper bourgeois democratic revolution
that buried their aristocracies in history.
It was never defeated in wars and forced
to undergo fundamental constitutional reforms like Germany and Italy. The feudal
aristocracy in Britain never became an
historical artefact as it did in other European states. Instead, they compromised,
collaborated, and coexisted with the
mercantilists, the industrialists, the imperialists, and the bankers and financiers
throughout the history of capitalism.
The expertise of the ancient aristocracy
on governance and statecraft, and that
of the business classes on economy have
been the mainstay of Tory governance.
Unlike most modern nations, Britain
does not have a written constitution.
National history is the source of the unwritten constitution, which includes
conventions, royal prerogatives, political
practices, and gentlemanly codes of conduct. Parliamentary supremacy means,
when push comes to shove, laws cannot
be struck down by courts, and whoever
commands majority in the parliament of
the day can make up the constitution as
they go along, so long as the changes
conform to constitutional traditions. These
arrangements ensure that the reins of
England remain in the hands of the neoaristocracy. The idea that the Tories
have a natural right to govern England is
deeply embedded within these historical
traditions. I suspect most English people,
including the more radical ones, may oppose the Tory party, this or that policy,
but remain unaware of the neo-aristocratic character of British democracy.
Right, Left and Right
What then of the opposition parties? In
the system of neo-aristocratic democracy
the limits of permissible opposition are
prescribed by the Tories. One reason why
the political, military and media establishments, including his own party
members of parliament (MPs), are against
Jeremy Corbyn, the left-wing Labour
party leader, is because he oversteps the
limits of permissible radicalism in the
neo-aristocratic model of democracy.
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july 9, 2016

The British left, like other European left,


has its own long histories of fear of migrants and confusions about nationalism. The Labour party was as divided by
the Brexit referendum as were the Tories.
The trade unions, the Labour partys main
support base, having given in to globalisation and productivity agreements, are
fearful that open EU borders and stricter
environmental regulations will affect
British jobs. The equally strong non-governmental organisations (NGOs), aid organisations and humanitarians, the likes
of OXFAMwhere Jo Cox, the Labour MP
who was murdered during the last phase
of the campaign, used to workwere with
the remain camp. These organisations increasingly form an important segment of
the Labour party alongside trade unions.
Nationalism criss-crosses all shades of
British politics, but without the ideologically appropriate vocabulary to articulate it in times of crises, such as the
one the Brexit referendum presented.
Both Cameron and Corbyn were reluctant
campaigners for the remain camp, not
least because the race demons unleashed
by the UKIP and smaller ultra nationalists
spread atavistic fears that are not easily
combated by arguments that presuppose
economic self-interest as the guiding
spirit for political action. Parties like the
UKIP are ideologically conservative, and
those like the Labour, ideologically left,
but neither have the class and the history
that the Tories have. Invariably, in such
a system, deep divisions in the ruling
elite and the state manifest as inner-party
struggles within the Tories. These fears are
played out nationally as arguments over
Englishness and identity versus cosmopolitanism and commerce. The Tories set
the agenda to which the others must tick
Yes or NO. Invariably when the Tory
nationalist fractions win they take Britain
down a rocky road and uncertain future.
History Repeats Itself?
Inner-party struggles ousted Edward
Heath and installed Margaret Thatcher
as party leader when the Tories were
divided and the country faced economic
crisis and unemployment. Thatcher too
played the immigration card, arguing
that popular fears about Britain being
swamped by people of different cultures

vol lI no 28

needed to be allayed, and that the National Front, a far right anti-immigration
party, had indeed raised legitimate concerns. Thatcher also promised to bring
down immigration. She is reported to
have snubbed Prime Minister Morarji
Desai when he was waiting to meet the
Liberal Party leader at 10 Downing
Street. Thatcher won to become the
Prime Minister who opposed trade unions,
privatised and liberalised the economy,
and sowed the seeds of polarisation,
poverty, and regional disparities.
Indians will recall Winston Churchill,
the wartime Tory Prime Minister, and the
struggle over Tory policies towards India.
Churchill vehemently opposed dominion
status to India, which is what the liberal
Congress leadership had asked for. At the
height of World War II, when two million Indian soldiers were fighting for the
empire with Indian money and materials,
Churchill never held back from display of
hatred for Indians. I hate the Indians.
They are a beastly people with a beastly
religion, he said, adding, [t]he Hindus
[are] a foul race protected by their mere
pullulation from the doom that is their
due. I wish that Harris, [the Air Chief
Marshall] would send some of his surplus
bombers to destroy them. When cautioned about the dangers of racial politics
that Britain was pursuing in India, which
could backfire on Britain under war conditions, Churchill said, [w]ell if our poor
troops have to be kept in a sweltering,
syphilitic climate and lice-infested barracks for the sake of your precious unity, Id
rather see them have a good civil war.1
The question as to what the future of
Britain might have been if the Tories had
conceded to dominion status for India
must remain a speculative one. In the
end, the Indians did have a good civil
war, but also the sunset over the British
Empire under Tory watch.
The Brexit vote and the victory of the
nationalist strand in Toryism present the
spectre of disintegration of the UK. Within
six hours of the result, Scottish First
Minister Nicola Sturgeon announced that
another referendum to leave the UK was
on the table. Sinn Fin leader Gerry Adams
in Ireland announced that the Brexit
result effectively undermined the Good
Friday agreement of 1998, which ended
21

COMMENTARY

a long-drawn-out and bloody civil war in


Northern Ireland and called for a border referendum on unification with the
Republic of Ireland. Spain called for

22

reunification of Gibraltar with the mainland. Can the same logic that ended the
empire now transform Great Britain into
Little England?

Note
1

july 9, 2016

All quotes from Churchills Secret War: The British Empire and the Ravaging of India During
World War II, by Madhusree Mukerjee (Basic
Books, New York 2010), New York: Basic Books.

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Economic & Political Weekly

COMMENTARY

UK Spirals into Political Crisis


after EU Vote
Kirsty Hughes

The leave side of the Brexit


referendum had no coherent
proposal or description of what
sort of future relationship the UK
would have with the EU. This lack
of clarity has led to many banks
and other financial organisations
looking to move staff and
operations elsewhere in the EU.

Kirsty Hughes is a commentator based in the


United Kingdom.

22

s the votes in the United Kindoms


EU (European Union) referendum
were counted in the early hours
of 24 June, the pound fell vertiginously
as Brexit became first probable and
then the definitive result. The UK had
voted 52% to leave the EU, a union it had
been a member of for 43 years.
Political crisis followed hard on the
heels of the slumping pound and tumbling stock markets. David Cameron resigned as Prime Minister opening up a
contest for leadership of the Conservative
Party, whose winner will be the UKs
Prime Minister. Meanwhile Nicola SturgeonScotlands First Ministerput
the prospect of a second independence
referendum for Scotland on the table,
calling it highly likely, with 62% of Scottish voters backing staying in the EU, in
strong contrast to English and Welsh voters who backed the leave campaign.
On 26 June, a series of resignations from
the shadow cabinet triggered a crisis for
the Labour Party and Jeremy Corbyns
leadership came under question. The right
wing of the Labour Party, unhappy with
Corbyns success last year in being elected
Labour leader, was only too ready to use
Corbyns lacklustre performance in the EU
referendum campaign as an excuse to
try to provoke a new leadership contest.
Meanwhile, Sinn Fein called for a
referendum on unifying Ireland to avoid
the EUs external border running between
the Republic of Ireland (which is in the
EU) and Northern Ireland (where the
population had also, like Scotland voted
to stay in the EU), and Spain called for
joint control (with the UK) of Gibraltar
whose British population had voted by
almost 96% to stay in the EU.

The economic, political and constitutional crisis unleashed by the Brexit vote
is, of course, one not only for the UK. EU
leaders in the other 27 member states
were not only quick to express their regret at the British vote but also to insist
that the UKs departure should be managed relatively quickly and that the rest
of the EU would remain united.
Yet the EU is already under strain
from the eurozone crisis and the refugee
crisisand populists in France and the
Netherlands rapidly called, after the Brexit
vote, for referendums on EU membership
in their countries too. The Euro also fell on
the currency markets and stock markets
fell across the EU with the turmoil
affecting wider global markets too.
How Did It Come to This?
The UK joined the EU in 1973, 16 years
after it was first set up as a project to
promote peace and prosperity in Europe
after the carnage of World War II. Britain
was long a slightly awkward member,
not sharing the political enthusiasm of
some member states for ever closer
political and economic union, staying
out of the Euro when it was created 17
years ago, and also opting out of the EUs
border-free Schengen zone.
Yet at the same time, the UK had been
an influential player in the EUit was
one of the driving forces behind the creation of the EUs large single market; it
played a big role, after the Berlin Wall fell
in 1989, in ensuring the EU enlarged to the
new democracies in central and eastern
Europe, and it promoted, for better or
worse, a strong free trade stance. While the
UK never fully matched the political influence of France and Germany, it was, with
them, one of the big three in Europe.
The Labour Party slowly put its doubts
about the EU behind it in the 1980s, accepting that the EU provided social protection for workers as well as large open markets for business. But the Tory Party went
in the opposite direction. As the Tories increasingly split internally during the 1990s

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Margaret Thatcher being pushed out over


her growing dislike of the EU, and the Tories then losing the general election in
1997 amidst their disarray and in-fighting
over Europethe Tory eurosceptic wing
became more influential within the party.
And so, when David Cameron got into
power in 2010, after 13 years of a new
Labour government, the question of the EU
was never far away. Cameron himself was
a mild eurosceptic, keen to impede any
major new political developments in the
EU while keeping the UK on the inside.
But most of all, he wanted to ensure the
Tories did not implode again over Europe.
Yet three years ago in 2013, Cameron
made a fatal promise to hold a referendum on the EU if the Tories got back into
power in the general election of 2015. He
did this to paper over divisions within
the partya tactic which worked in the
short term, and then exploded spectacularly during the months of campaigning
since the start of this year, ahead of the
23 June EU referendum.
Losing the Argument
The remain in the EU campaign put its
biggest emphasis on the economic benefits of the UK staying in the EU, while the
leave campaign increasingly emphasised immigration and the fact that
there is free movement of labour within
the EU, exploiting populist and xenophobic concerns about immigration as well
as encouraging voters to see immigration,
not the Tory government, as the cause of
their concerns on education, the National Health Service (NHS) and housing.
Despite warnings from the Organisation
for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF), the Bank of England
and the Treasury, as well as the leaders
of the Conservative, Labour, LibDem,
Green and Scottish National Party all
supporting remaining in the EU and only
the populist and far right Nigel Farages
UKIP (UK Independence Party) supporting leave, but crucially along with several members of the Tory cabinet, including
Boris Johnson and Michael Gove, British
voters chose 52% to 48% to leave the EU.
This has been rapidly interpreted as a
popular and populist backlash against the
establishment elites, and globalisation.
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july 9, 2016

While there is some truth in this, the


closeness of the vote also shows that the
British public was in fact divided almost
down the middle. With Scotland and
Northern Ireland voting to stay in the EU,
against England and Wales voting to leave,
a political and constitutional as well as
economic crisis has been unleashed.
It is hard to underestimate the impact
of this decision. The UK has essentially
voted for a policy that is already and will
continue to damage its economic outlook,
that is creating political crisis and chaos
at home, that has fatally undermined its
role and influence in the EU and the wider
world, and that is and will also prove
damaging to the rest of the European
Union, and with effects further afield.
It is an act of folly that is creating shockwaves that will continue for many weeks,
months and years ahead. The UK has essentially chosen a Little England path
making a disturbing choice to cut off from
its European partners and its influence in
the EU and globally. It is an act of extraordinary political and economic self-harm.
Yet it is a choice that has deep roots.
The UK political discourse over the last
decades has failed to counter the euroscepticism of the Tory Party and of much
of the mainstream, eurosceptic media.
Nor has there been robust defence of the
positive, creative and economically beneficial effects of immigration from inside
and outside the EU on the UK economy.
Holding a referendum at a time when
the EU was also in crisis over the eurozone,
the large number of refugees attempting
to come to Europe, and the growth of populism in a number of its member states
were another huge error by Cameron.
Nor did he make any real attempt to
portrayin his campaigning for the
remain sidethe UK as being a strategic
and influential player in the EU. Indeed
he could not. As Prime Minister, Cameron
had chosen to position the UK on the EUs
sidelinesnot getting involved in the
euro crisis, refusing to take more than
the smallest number of refugees from
Syriaand then negotiating more optouts from the EU as part of his reform
deal to persuade the British public to
back remain in the referendum.
As a Little England Prime Minister
reducing the UKs influence in the EU

vol lI no 28

over the last six years and with barely a


foreign policy to his nameCameron
was ill-equipped to suddenly make a
strong and strategic case for the UK to remain in the EU. Instead, he was reduced
to making a narrow, short-term costs and
benefits case for what the UK got from
the EU and with no answers as to why he
had failed in his declared aim of cutting
immigration into the EU.
In the end, the referendum was lost
through the votes of mainly working class
Tory and UKIP voters. While Labour voters
were 63% in favour of staying in the EU, a
number of Labour voters in poorer, rundown areas also backed the leave campaign. Corbyn, long known as fairly eurosceptic in his views, made a half-hearted
and unconvincing case for staying in the
EU while accepting it was far from perfect.
Yet it was Tory voters who voted for
leave 58% to 42%, so in the end a Tory
Prime Minister, having called a referendum he did not have to call, failed to
persuade his Tory voters to back him.
With political and economic crises developing apace, the UK has entered deeply
troubled times and the EU too now has to
deal with the shockwaves. Scotland may
well hold another independence referendum in the next two years and if successful it would aim to stay in the EU as
an independent member state. The UK
would have been split asunder.
Camerons gamble has taken the UK out
of Europe and may lead to the end of the
UK as we know it today. While the UKs exit
from the EU could take as little as two years,
it will take much longer to negotiate a new
trading relationship with the EU, and the
UK will also need to negotiate new trade
deals with the rest of the world, since it will
no longer be part of EU-negotiated deals.
One of the extraordinary features of
the referendum campaign was that the
leave side had no coherent proposal or
description of what sort of future relationship the UK would have with the EU.
This lack of clarity has led to many banks
and other financial organisations now
looking to move staff and operations
elsewhere in the EU, a process starting
within the first few days of the result.
The UK has embarked on a strange
and crisis-ridden journey, and where it
will end is quite unclear.
23

Birth of Bangladesh
Recollections of a Politician Economist

when two students of Dhaka University


vouched for his identity. Sobhan was in
jeopardy for his lack of facility in Bangla, a
hallmark of the Bengali Muslim elite, many
of whom spoke only Urdu and English.

Habibul Haque Khondker

Days and Nights in Kolkata

ehman Sobhan, the author of


this book, describes himself as
a politician economist who became a combatant, not at battlefield, but
in the arena of diplomacy and international politics. During the liberation war
of Bangladesh, Sobhan had a role in drafting the Proclamation of Independence
a draft that he worked with Barrister
Amirul Islam in Delhi where he inserted
Peoples before the Republic of Bangladesh. Sobhan justified the insertion
by stating that the independence of
Bangladesh would be the culmination of
the struggle of the people.
Sobhan was also at hand in introducing
and vouching for the credentials of
Tajuddin Ahmed, the would-be Prime
Minister of Bangladesh to the Indian
political elite. He knew some of the key
economists in Delhi at that time, Amartya
Sen and Ashok Mitrathey introduced
him to P N Haksar, Principal Secretary
to Prime Minister Indira Gandhi. Sobhan
was both the ultimate fixer and the gobetween in those crucial moments in the
history of Bangladesh.
Sobhan played a key role in laying the
economic basis of a nationalist struggle.
He took Bangladeshs cause to London,
Washington, Paris and Rome, pleading and
cajoling the World Bank, and other donors,
opinion-makers, and powerful politicians
to look at the unfolding tragedy from his
countrys standpoint. Sobhan has multiple
identities. A quintessential public intellectual, a freedom fighter, an Envoy Extraordinaire in charge of Economic Affairs
(p 409), a confidant of Sheikh Mujibur
Rahman (like most Bangladeshi nationalists, he adoringly refers to him as
Bangabandhu) in the formative phase of
the nationalist movement, an inspiring
professor, a caring mentor, a journalist, an
institution builder, a food aficionado, a
sports enthusiast, and a connoisseur of
24

book reviewS
Untranquil Recollections: The Years of
Fulfilment by Rehman Sobhan; New Delhi: Sage, 2016;
pp 445, `450 (paperback).

music. When such a multivalent personality, a legend in his own rights, writes his
memoirs, multiple twists, strands and
dimensions are natural. It is difficult to
find a point of departure.
With Politicians and Intellectuals
Let us start with a photograph in the
middle of the book under review (before
page 232) where Rehman Sobhan as a
young student is seen with some of the
most distinguished politicians, business
tycoons and future academics and journalists of South Asia. Jawaharlal Nehru
and Swaran Singh, along with others, are
seen with young Sobhan, the then president of Mazlish, a platform for the South
Asian students at Cambridge. There is
another photo of him running a marathon
at St Pauls school at Darjeeling. Sobhans
marathon of a long public life is yet to
end. His friends circle at Cambridge days
included Amartya Sen, Mahbub ul Haq
and Manmohan Singh, among others and
his teachers included Joan Robinson,
Peter Bauer, Maurice Dobb and other
luminaries. The network of economists
was probably the only network that existed in South Asia in the 1960s and early
1970s; this network played a crucial role
in the early phase of the liberation war.
Sobhan and Anisur Rahman, a fellow
economist at Dhaka University, crossed
into Agartala in disguise following the
military crackdown that was launched on
the night of 25 March 1971. This was a perilous journey during which Sobhan was
mistaken as a non-Bengali, and was about
to meet popular justice. Fortunately for
himand for Bangladeshhe was spared

Sobhan was a product of an elite class;


his father trained at Sandhurst and later
served as a top police officer in Kolkata,
and his mother belonged to the Dhaka
Nawabi family, which he refers to as
DNF. (Sobhan has a penchant for abbreviations.) He was sent to a boarding
school in Darjeeling at a very young age.
At the boarding school, he was noticed
for his eloquence, brilliance in classroom and leadership qualities, especially
in sports. He was a man of enormous selfconfidence. He once asked President Yahiya Khan of Pakistan why there was no
Bengali economist at the top echelon.
Khan, perhaps in half jest, asked him to
fill the vacuum.
Sobhan has fond memories of his
childhood that alternated between the
spartan conditions of boarding school and
a carefree lifestyle in Kolkata household.
His loving, perhaps somewhat indulgent
mother used to take him (he was eight
years old then) to a movie show in New
Empire, Metro or Light House where new
Hollywood movies would be screened. In
one such instance in early 1943 a newsflash alerted the viewers about bombs
dropping in Kolkata. Sobhan writes: My
mother was not one to be deterred from
watching a good movie to its conclusion
merely by a few Japanese bombs (p 33).
A good part of the book reminisces
about Kolkata, his birthplace and a city
where he grew up amidst great affection. The narrative brings the sights and
sounds of Kolkata of the 1940s alive and
one can almost smell the chicken tikka of
Nizams or fried bhetki at Firpo. A foody
and a film buff, he spent his halcyon
days in Kolkata.
Sobhan admits his ignorance of the
developments leading to the partition of
India and the attendant nationalism and
bloodletting when he was at St Pauls
busying himself with academic and sporting pursuits. He was barely 12 at that

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BOOK REVIEW

time. But as he began to grow up, Sobhans


commitment to the social causes and his
empathy for the downtrodden were
abundantly clear by his option to teach
at the Dhaka University, the center-point
of the nationalist struggle.
A Professor with a Cause
Through his family connections, Sobhan
knew some of the stalwarts of politics.
His paternal uncles included the finance
minister of the princely state of Bhopal
and the Chief Justice of Pakistans
Supreme Court. Hussain Saheed Shurwardy, the chief minister of undivided
Bengal was his wifes uncle. His maternal grandfather Khwaja Nazimuddin too
held the position of chief minister of
undivided Bengal from 194345. He went
on to become the chief minister of East
Bengal, governor general and later Prime
Minister of Pakistan. It was at a dinner
hosted by Nazimuddin that Sobhan first
met Sheikh Mujibur Rahman in 1957.
Sobhan does not provide full disclosure
to his well-connected family.
The privileged connections did not
stand in his way; rather he leveraged
them in his pursuit to become an indefatigable fighter against exploitation and
injustice. Widely admired as an articulate
voice of the downtrodden, Sobhan identified with the cause of the Bengalis in
their struggle for social justice. Regional
disparity overlaid an exploitative social
structure where the Bengalis, the numerical majority in Pakistan, were on the
receiving end of exploitation, humiliation and discrimination. Sobhan cast his
lot with the aspirations of the ordinary
Bengalis whose extraordinary courage and
resilience deeply impressed the Cambridge University graduate, who had become a reader at the Dhaka University.
Characteristic Humility
Sobhan narrates his life story without
taking credit for any of his achievements.
But it is difficult to deny the imprint of a
humanist, a scholar with a heart for the
downtrodden on his students, many of
whom playedand continue to playa
decisive role as politicians, public officials and civil society activists. The
two-economy theory, the backbone of
the Six-Points that provided the basis for
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JUly 9, 2016

the movement of political and economic


autonomy from Pakistan under the leadership of Sheikh Mujibur Rahman, is attributed to him. Yet Sobhan deflects credit
by sharing it with a group of Bengali
economists whose nationalistic aspirations
were bred in the context of Pakistani
economic exploitation. In his book Basic
Democracies, Works Programme and Rural
Development in East Pakistan (1966), he
launched the first intellectual salvo on
the authoritarian rule of Pakistanis. The
book was a painstaking, politico-economic
analysis of rural development which
was underwritten by food aid under
PL480 and the Pakistani government
under Ayub Khan.
With his cousin Kamal Hossain, Sobhan
organised fellow intellectuals to set up a
discussion group, the National Association
for Social and Economic Progress (NASEP).
This soon became a think tank, where likeminded nationalists discussed problems
economic disparity, issues of education
and authoritarian politics of Pakistan.
The young academics were spirited,
highly educated, nationalists yet cosmopolites, who sought to forge linkages
with political parties which led to the
formation of Janamaitri Parishad (JMP)
in 1962.
As a young economist, he was questioning the older economists, mostly Pakistani,
about regional disparity. His constant
probing and questioning gave him notoriety but also rightful exposure within the
circle of the economists. However, his
reputation was anchored in his contributions to newspapers where he sought to

mobilise the intellectual class who read


the English dailies. Sobhan along with
Kamal Hossain and Hameeda Hossain
brought out a weekly magazine Forum
from 1969 to 1971, which published some
of the most penetrating analyses of the
political economy of Pakistan and provided a blueprint for the nationalist
struggle. As a journalist he quickly caught
the imagination of the intelligentsia and
attention of the authority. He was sought
both by the nationalist politicians as well
as by the Pakistani intelligence community.
An Accidental Diplomat
On 27 March 1971 Sobhan, then an economics professor at Dhaka, left home for
India. His own fate was as uncertain as
that of Bangladesh, he recollects in this
memoir subtitled The Years of Fulfilment.
Lincoln Chen, an American professor
and a friend of Bangladesh in a review of
Sobhans book in the Hindu (28 February
2016) wonders, why fulfilment?
Fulfilment for Sobhan was seeing
Bangladeshs liberation, a dream that
finally materialised on 16 December 1971,
which he saw from his temporary house
at Oxford on TV with a broken ligament
sustained at the United Nations (UN)
building in New York. Until 15 December
1971 Sobhan, an officially anointed
envoy extraordinaire by the Mujibnagar
government, lobbied hard at the UN.
He moved from lawmakers offices in
Washington DC to persuade them to support the cause of Bangladesh.
Sobhans journey began in 1957 when
a 21-year Cambridge graduate landed in

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Venue: Bangalore International Centre
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vol lI no 28

25

BOOK REVIEW

Dhaka. He called Bangladesh home,


even though his facility with Bangla language was almost non-existent. His power
of articulation in English is exceptional.
But the gift of gab that Sobhan honed in
his school days at St Pauls, Darjeeling,
Aitchison College, Lahore, or Cambridge
where he was the president of Majlish,
came handy in his role of an envoy for a
country yet to be born. His Cambridge connections helped Sobhan establish linkages with an international old boy network some of who were economists and
other prominent journalists.
Though, he met Mujib along with Chief
Minister Ataur Rahman at the residence
of his maternal grandfather, Khwaja
Nazimuddin in 1957, it was not until
1964 that Sobhan developed a close relationship with the founder of future
Bangladesh. That year, Mujib invited
Kamal Hossain and Sobhan to help draft
the manifesto for 1964 elections. When
Ayub Khan declared his candidacy for
the 1964 elections and issued a list of his
achievements, Mujib asked the duo to
contribute to the drafting of his response.
Sobhan fondly recollects Sheikh Mujibs
greatest quality to reach out to people

and draw upon their perceived qualities


at the service of the nation.
Sobhans memories take the readers
to so many untold stories of the challenges
of the liberation war, the intrigue in
Kolkata between the Mujibnagar, 8
Theatre Road and the Bangladesh foreign Ministry at Park Circus where
Mushtaq and his gang were conspiring
with the US officials. His narratives vividly
record the story of sacrifice and commitment of so many, who cast their lot with
the cause of Bangladesh. Americans,
Indians, British, French academics, philosophers and ordinary men and women
were able to make the choice in favour of
justice. Some made the right choice on
their own, others needed little persuasion.
Sobhan was one of the few who had an
audience with Sheikh Mujib only hours
before his arrest on 25 March 1971 along
with Mazhar Ali Khan, a Pakistani journalist with links to Bhuttos Peoples Party. To
whom Sheikh said, they may kill me, but
an independent Bangladesh will grow on
my grave. Sobhan chronicles some of the
most crucial days leading to the launching of genocide by the Pakistani military
on 25 March 1971. Following the abrupt

postponement of the inaugural session of


the constituent assembly on 1 March 1971
Bangladesh, what was then East Pakistan,
exploded in protest. The elections of
December 1970 gave the Awami League
of Sheikh Mujib a mandate to become
the Prime Minister of Pakistan as it won
160 of the 162 seats in the 300-seat parliament in a free and fair national election.
The postponement of the parliamentary
session sine die by President Yahiya
Khan was taken as an act of betrayal.
Sheikh Mujib reacted sharply, but
judiciously, declaring a non-violent,
non-cooperation movement immediately
which led to civil servants, and business
communities pledging support and allegiance to Bangabandhu. From 5 March
onwards, Sobhan notes, the call of
Bangabandhu Sheikh Mujibur Rahman
repudiated the political authority of the
Pakistani government within the territory
of Bangladesh. This political authority was
never restored (p 330). The transference
of authority from the military-ruled
Pakistan to Bangabandhu on 5 March
renders contemporary political discussions on the declaration of independence
both mindless and pointless (p 330).

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vol lI no 28

EPW

Economic & Political Weekly

BOOK REVIEW

Sobhan along with Nurul Islam, Tajuddin


Ahmed and Kamal Hossain were instrumental in running the day-to-day functions
of the government in those fateful days.
The memoir ends on the last day of
December 1971 when Sobhan returned
to Dhaka after accomplishing his mission.
His memoir provides a window to the

Economic & Political Weekly

EPW

JUly 9, 2016

complicated political and diplomatic


processes of the background of the war
of independence and the historical
antecedents that led to the birth of a
nation. The process, surely, was untranquil. In the early days of April 1971 in
Delhi, Sobhan was prescient as he wrote
in the Declaration of Independence, a

vol lI no 28

document that accompanied the Proclamation of Independence, Pakistan lies


dead and buried under a mountain of
corpses (p 368).
Habibul Haque Khondker (habib.khondker@
gmail.com) is a professor of sociology at Zayed
University, Abu Dhabi, UAE.

27

BOOK REVIEW

Reforming the Risky


Financial System
Thomas E Weisskopf

ohn Kay has written a highly readable and often incisive book about
the way in which the financial practices dominating much of the world have
evolved into a highly dysfunctional system that generates ever greater instability, inequality and waste. As someone
who has not only academic credentials
but considerable practical experience in
the financial sector, and who believes in
the benefits of the free market in many
contexts (for example, Kays The Truth
About Markets, 2003), his trenchant
critique of the contemporary financial
world is all the more credible. He draws
on historical, economic, legal and psychological perspectives to analyse modern
finance, focusing especially on the experiences of the United States (US) and
the United Kingdom (UK); and he offers
proposals for reform.
Modern Financial System
Kays main aim is to show how contemporary financial institutions fail to serve
well the primary purposes of a financial
system: (i) to process payments, (ii) to
channel savings to productive investments, (iii) to help manage personal finances across the lifecycle and across
generations, and (iv) to manage and
transfer risk. As he demonstrates, the
primary business activity of large financial institutions is no longer financing
growth in the real economy; instead it
is exchanging financial claims (bits
of paper) with peer institutions. The
explosion in the volume of financial
Economic & Political Weekly

EPW

JUly 9, 2016

Other Peoples Money: The Real Business of


Finance by John Kay; New York: Public Affairs, 2015;
pp 352, $27.99 (hardcover).

activity in recent decades is largely attributable to the development of markets in


derivatives and swaps; innovations that
arose in the interstices of the financial
system partly as a means of avoiding government regulation. The profits made
nowadays in finance represent in large
part not the creation of new wealth but
the financial sectors appropriation of
wealth created elsewhere in the economy,
which enriches most of all the executives
and senior employees of that sector.
Unlike many critics of the modern
financial system, Kay does not believe
that the most fundamental problem is
the sheer size of financial institutions;
instead, he locates the essence of the
problem in the extraordinary complexity
of contemporary financial activity. In a
particularly insightful section of the
book, he notes that complexity, and the
specialisation and interdependence to
which it gives rise, have greatly increased
human productivity in many domains;
but one consequence of greater complexity
is greater potential for instability and
crisis. A system in which everything
depends on everything else, and in which
there is little tolerance of error, lacks
robustness. As Kay observes,
Engineers responsible for interactively complex systems have learned that stability and
resilience require conscious and systematic
simplification; modularity, which enables

vol lI no 28

failures to be contained; and redundancy,


which allows failed elements to be by-passed
(p 264).

Yet by the time of the global crisis,


financial systems had shed all semblance
of the simplicity, modularity and redundancy that had characterised them
decades earlier.
As Kay argues, the sheer complexity of
contemporary finance both enables and
results from excessive risk-taking on the
part of financial market participants.
The escalation of financial riskiness and
complexity has led not only to greater
economic instability, culminating in a
global financial crisis, but also to excessive compensation of financial executives
and their key employees. And the extraordinarily high salaries (and bonuses)
paid out in the financial sector have led
to a huge waste of talent, as many of the
ablest graduates of first-rate educational institutions pursue careers in finance
rather than in the real economy. The
mushrooming of the financial sector is
clearly a major source of growing inequality within the affluent nations of
the world; and, as Kay pithily notes,
inequality of rewards so incommensurate with inequality of contributions to
society are especially corrosive of the
social order.
The counterproductive evolution of
financial systems has been justified, if
not also stimulated, by the marketfundamentalist theoretical approach
dominating modern financial economics.
As Kay points out, this approach treats risk
like any ordinary commodity, for which
different people have different preferences or different capabilities. Voluntary
trade between people with different attitudes towards risk is then assumed to
benefit both parties, just as voluntary
purchase or sale of goods and services
benefits both parties. Indeed, the case
27

BOOK REVIEW

for a free market rests fundamentally on


the notion that market transactions are
necessarily positive-sum in nature.
But this approach to financial economics ignores the potential for information
asymmetry, which obtains when people
entering a market have different degrees
of relevant information and knowledge.
As Kay points out, markets for securities
are largely based on precisely such differences in information and knowledge
between the two parties to a transaction,
rather than on differences in preferences
or capabilities. This helps to explain why
finance can be so hugely profitable, and
why its profitability is a very poor indicator
of its contribution to well-being. Derivatives, credit default swaps, and other such
innovative financial instruments are essentially a form of gambling, in which one
party gains what the other loses. Freemarket principles cannot be adduced to
justify such zero-sum transactions.
Kay argues persuasively that financial
profits have very little to do with contributions to general welfare, either as an
incentive to provide useful goods and
services or as a measure of the contribution of the financial sector to society.
He suggests that the surge in financial
innovation in recent decades has served
mainly to intensify the dichotomy that
Marx described between material physical assets and the superstructure of securities that represent or relate to them.
Echoing John Maynard Keynes, he goes
on to note that the returns to a security
depend on the assessments of other
traders, as opposed to the fundamental
value of the assets on which they are
based, to an extent that varies inversely
with the length of the time horizon. In
contemporary capital markets, therefore,
what matters is not so much... knowledge
of business, economic development,
global politicsas knowledge of the activities of other market participants (p 110).
Proposals for Reform
In the latter chapters of his book Kay turns
to proposals for reforming the dysfunctional contemporary financial system.
He is sceptical of the ability of government regulators to rein in the financial
excesses he has documented, because
as he rightly observesregulators never
28

have as much relevant information as


those whom they are tasked to regulate,
and they never have the resources needed to offset the financial and political
clout of their adversaries. Nor does Kay
believe that simply breaking up financial
institutions into smaller-sized units
would make much difference. Instead,
he calls for wholesale structural reform
aimed at separation and simplification
of financial activities, along the following lines.
Fundamentally different kinds of financial activity should be separated from
one another. First of all, deposit banking
should be walled off from investment
banking. And because deposit-banking
liabilities are largely guaranteed by government, taxpayers who foot any ultimate bill for this guarantee should also
be protected from loss. This means that
deposit-banking assets should be limited
to government borrowings and goodquality housing. Investment banking should be characterised by short, linear
chains of intermediation, and their asset
managers should have the skills needed
to channel savings into good investment
opportunities in the real economy and
to help households transfer wealth
across their own lifetimes and between
generations. Finally, and most crucially,
both deposit and investment banking
should be walled off from speculative
trading. (This latter part was the underlying intent of the Volcker Rule, proposed to US President Barack Obama by
former Federal Reserve chair Paul Volcker in the wake of the financial crisis of
2008; but only to a very limited extent
was it actually implemented.) As Kay
puts it: Financial intermediaries can act
as custodians of other peoples money, or
they can trade with their own money,
but they must not do both at the same
time (p 272).
Efforts around the world to reduce the
explosion of risk-taking that generated
the financial crisis have fallen far short
of the kind of structural change that Kay
has in mind. Moreover, he envisages
considerably more than the separation
and simplification of financial activities.
He calls for nothing less than a change
in the industry culture: anyone who
handles other peoples money, or who
JUly 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

BOOK REVIEW

advises how their money should be handled, should demonstrate behaviour


that meets standards of loyalty and prudence in client dealings and avoids conflicts of interest (p 260). He is nostalgic
about the trusting, long-term relationships among financial market participants more characteristic of the much
simpler financial environment a half
century ago. But it is far from clear
how such trust could be restored, even

if all of Kays proposed reforms were


implemented.
The structural changes in modern
finance that Kay advocates could only
be legislated in the context of a wholesale change in the political climate of
countries such as the US and member
states of the European Union. Kay is
well aware that, the finance sector is
today the strongest of all industrial
lobbies (p 286) and that little progress

can be made in reforming finance unless the influence of money on politics is


reduced (p 287). Indeed, he goes on to
opine that the situation in the US seems
beyond repair (pp 28788). In other
countries, like India, there might be a
better chance.
Thomas E Weisskopf (tomw@umich.edu)
is Professor Emeritus of Economics at the
University of Michigan, AnnArbor, the US.

Books Received
Atal, Yogesh (2016); Indian Tribes in Transition: The
Need for Reorientation, Oxon and New York:
Routledge; pp vi + 192, `895.

(2016); Indian Agricultural Economy under


Liberalised Regime (19912015), New Delhi:
Academic Foundation; pp 937, `1,895.

Bharat, Meenakshi (2016); Troubled Testimonies:


Terrorism and the English Novel in India, Oxon
and New York: Routledge; pp xi + 196, `895.

Jain, Satish K and Anjan Mukherji (eds) (2015);


Economic Growth, Efficiency and Inequality,
New Delhi, Oxon and New York: Routledge;
pp xx + 206, `795.

Chakrawal, Alok and Pratibha Goyal (2016); Stress


Management, Delhi: Studera Press; pp xviii + 344,
`435.
Chandra, Vinod (ed) (2016); Childhood Realities:
Working and Abused Children, Delhi: Kalpaz
Publications; pp 283, `925.
Chandramohan, P (2016); Development Modernity
in Kerala: Narayana Gur, SNDP Yogam and
Social Reform, New Delhi: Tulika Books; pp xv
+ 260, `750.
Chowdhary, Rekha (2016); Jammu and Kashmir:
Politics of Identity and Separatism, Oxon and
New York: Routledge; pp xv + 259, `895.
Clark, Alice W (2016); Valued Daughters: FirstGeneration Career Women, New Delhi, California,
London and Singapore: Sage Publications;
pp 200, `595.
Dale, Gareth (2016); Karl Polanyi: A Life on the Left,
New Delhi: Columbia University; pp vii + 381,
UK 40.00 (cloth)/30.00.
Das, Gurudas and C Joshua Thomas (eds) (2016);
Look East to Act East Policy: Implications for
Indias Northeast Oxon and New York: Routledge; pp xvii + 252, `895.
De, Sudipto Kumar (2016); Oceans and the Future of
the Human Race, New Delhi: Gennext Publications; pp 503, `540.
Gopalan, Viswanathan (2016); Knowledge Management in Organisations and in Peoples Lives, New
Delhi: Gennext Publications; pp 154, `540.
Gundimeda, Sambaiah (2016); Dalit Politics in Contemporary India, Oxon and New York: Routledge; pp xxxii + 298, `995.
Gupta, Rakesh (2016); Dara Shukuh: Captive Visionary of His Times, Delhi: Kalpaz Publications;
pp 236, `790.
Gupto, Arun (2016); Goddesses of Kathmandu Valley:
Grace, Rage, Knowledge, Oxon and New York:
Routledge; pp xvi + 203, `895.
Indian Society of Agricultural Economics (2016);
Indian Agricultrual Economy under Green Revolution (1966 to 1990), New Delhi: Academic
Foundation; pp 728, `1,595.
(2016); Indian Agricultural Economy during PreGreen Revolution Era (1940 to 1965), New Delhi: Academic Foundation; pp 462, `1,295.
Economic & Political Weekly

EPW

JUly 9, 2016

Jethwaney, Jaishri (2016); Social Sector Communication in India: Concepts, Practices and Case
Studies, New Delhi, California, London and
Singapore: Sage Publications; pp xiii + 269,
`850.
Kapur, Anu (2016); Made Only in India: Goods with
Geographical Indications, Oxon and New York:
Routledge; pp xxi + 228, `895.
Khanna, Parag (2016); Connectography: Mapping
the Global Network Revolution, London: Weidenfeld & Nicolson; pp xxv + 456, `500/UK
13.99.
Moulik, Achala (2016); Dangerous Dispatches, New
Delhi: National Book Trust; pp 379, `410.
Muntaqim, Khwaja Abdul (2016); Islam Discourages Polygamy and Divorce a Reality, Not a Myth,
Delhi: Kalpaz Publications; pp 150, `490.

Roy, Ramashray and Ravi Ranjan (2016); Essays


on Modernism, Democracy and Well-being: A
Gandhian Perspective, New Delhi, California,
London and Singapore: Sage Publications;
pp x + 312, `1,195.
Sanchez, Andrew (2016); Criminal Capital: Violence, Corruption and Class in Industrial India,
Oxon and New York: Routledge; pp xxi + 185,
`795.
Satchidanandan, K (ed) (2016); Words Matter:
Writings against Silence, Gurgaon: Penguin;
pp ix + 261, `399.
Scahill, Jeremy (2016); The Assassination Complex:
Inside the Governments Secret Drone Warfare
Program, London: Serpents Tail; pp xviii +
234, `399.
Sen, Satadru (2015); Benoy Kumar Sarkar: Restoring the Nation to the World, Oxon and New
York: Routledge; pp xi + 208, `395.
Singh, Avinash Kumar (ed) (2016); Education and
Empowerment in India: Policies and Practices,
Oxon and New York: Routledge; pp xxvi + 403,
`1,050.

Nayak, Smita (2016); Combating Violence against


Women: A Reality in the Making, Delhi: Kalpaz
Publications; pp 278, `900.

Singh, Hemlata and Rajkumar Singh (2016); Challenges of Contemporary India: Polity, Justice,
Education, Empowerment & Judiciary, Delhi:
Kalpaz Publications; pp 296, `950.

Palanithurai, G (2016); Critical Mass to Critical


Action: A Study of the Process of Empowerment,
New Delhi: Gyan Publishing; pp 231, `424.

Singh, Hulas (2016); Rise of Reason: Intellectual


History of 19th Century Maharashtra, Oxon
and New York: Routledge; pp vii + 345, `995.

Pillai, K Raman, R K Suresh Kumar and P Sukumaran


Nair (eds) (2016); Panchayati Raj Experience in
India, Delhi: Kalpaz Publications; pp 343,
`1,125.

Singh, Rajkumar (2016); Tireless Border Diplomacy


of India with China and Pakistan, New Delhi:
Gyan Publishing; pp 293, `950.

Prasad, Rohit (2016); Blood Red River: A Journey


into the Heart of Indias Development Conflict,
Gurgaon: Hachette; pp 325, `399/UK 8.99.

Sinha, Sanjay Kumar (2016); Suicide? There Is


Always a Tomorrow, New Delhi: GenNext Publications; pp 184, `250.

Racioppi, Linda and Swarna Rajagopalan (eds)


(2016); Women and Disasters in South Asia:
Survival Security and Development, Oxon and
New York: Routledge; pp xii + 317, `1,050.

Subramanium, Gopal (2016); Constitutional Morality: Is It a Dilemma for the State, Courts and
Citizens? Visakhapatnam: Centre for Policy
Studies & Visakhapatnam Public Library;
pp 92, price not indicated.

Raman, K Ravi (2015); Global Capital and Peripheral


Labour: The History and Political Economy of
Plantation Workers in India, Oxon and New
York: Routledge; pp xi + 273, price not indicated.

Thussu, Daya Kishan (2016); Communicating


Indias Soft Power: Buddha to Bollywood, New
Delhi, California, London and Singapore: Sage
Publications; pp ix + 235, `495.

Ramasamy, C and K R Ashok (eds) (2016); Vicissitudes of Agriculture in the Fast Growing Indian
Economy: Challenges, Strategies and the Way
Forward, New Delhi: Academic Foundation in
Association with Indian Society of Agricultural
Economics; pp 665, `1,495.

Veeramani, C and R Nagaraj (eds) (2016); International Trade and Industrial Development in
India: Emerging Trends, Patterns and Issues,
New Delhi: Orient BlackSwan; pp xviii + 339,
price not indicated.

Rao, C Nagaraja (2016); Urban Governance in India,


Delhi: Kalpaz Publications; pp 278, `890.

vol lI no 28

Visvanathan, Shiv (2016); Theatres of Democracy:


Between the Epic and the Everyday, Noida:
HarperCollins; pp xviii + 429, `699.

29

INSIGHT

Science and the Scientist


in a Changing Climate
Radha Gopalan

Is sustainability an idea, a
science, a philosophy or a way of
life? The premise of this article is
that sustainability is all of these
and more. Furthermore, science
and technology of both today
and the future must be
re-visioned to understand and
enable sustainability.

Radha Gopalan (radha.gopalan@gmail.com) is


a member of the Coordination Council, Food
Sovereignty Alliance, India.

30

he idea of sustainability is not


new if we understand it as coexistence of humans and nature
rather than domination of nature by the
human species. Without going back to
hunter-gatherer days of the human species, sustainability is evident even in the
industrial and post-industrial era. Practices by local and indigenous communities such as: protecting specific areas
as sacred spaces since they were sources
of water and biodiverse forests; practising shifting cultivation in hilly areas,
with long periods of fallow (between
10 and 20 years); raising multiple crops
agro-ecologically; restoration and recovery of ecosystems through seasonal
fishing and grazing animals in different
locations at different times of the year;
accommodations between settled agriculturists and pastoralists which allowed animals to graze on crop residues
while they deposited their manure on
the fields, etc, are all ways of living
sustainably.
Built into this understanding of sustainability, are two important precepts:
(i) interdependence of the resilience of
human life with the resilience and stability
of natural ecosystems; and (ii) the understanding of timetime for the natural
ecosystem to recover, to restore, and to
stabilise after use and depletion. This
recovery and restoration is necessary if
the resources are to be available for
human needs for a long time, possibly
across generations. Such a practice of
sustainability is built on experiential
knowledge and inherited skills of living
rather than merely a theoretical understanding of ones environment.
In the late 1980s, the definition of sustainability began to be articulated as sustainable development by policy makers,
international development agencies, development economists and practitioners.

The focus was on human well-being.


Subsequently these two terms began to
be used interchangeably, even in academic discourses. This focus on human
development alone has diluted the idea
of sustainability. Human society must
recognise that achieving sustainability
and human well-being is impossible if
our understanding does not encompass
all life forms, human and non-human.
This is increasingly becoming clear as
we see and experience the effects of
complex phenomena like humananimal
conflict (for example, conflict between
communities living near national parks
and sanctuaries and wildlife when the
food and territory of both are threatened by unplanned development), water
wars, increasing temperatures and global
warming-induced climate change: phenomena that are pushing human society
to revisit and redraw the rules of human
nature engagement.
The need to understand sustainability
in all its dimensions is pivotal to the current discussion because (i) science is the
foundation on which human society has
shaped its relationship with nature, and
(ii) finding ways to mitigate and/or
adapt to many of the consequences of
this relationship extend beyond science.
As Albert Einstein said, We cannot
solve our problems with the same thinking we used when we created them.
This article has therefore been structured to first try and frame sustainability and then discuss the role of science and technology in the context of
sustainability. The position taken in this
article is drawn from the authors own
understanding of sustainability, shaped
by a trajectory that includes academic
training in environmental science and
engineering, almost two decades as an
environmental consultant to industry,
government and multilateral agencies
and the last eight years as a high school
teacher. Critical to this understanding
has been several years of experiential
learning with small farmer, pastoralist
and Adivasi communities about a
world view of humannature coexistence through the framework of food
sovereignty.

july 9, 2016

vol lI no 28

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Economic & Political Weekly

INSIGHT

Defining and
Framing Sustainability
Sustainability is defined in multiple ways
and the emphasis provided in the definition is usually a function of the subject
discipline from where the definition
originates. An example of this is the prefix often used in defining sustainability:
ecological sustainability, environmental
sustainability, economic sustainability,
social sustainability, sustainability science,
etc (Morelli 2011). In most scientific literature the definition of sustainability is
embedded in ecology. This is because its
usage emerged from the environmental
movement. Sustainability has been described through various terms, including
conservation, renewable, eco-efficiency,
environmentally sound, ecological footprint, ecosystem services, etc. In the mid
to late 1980s, sustainability entered the
global political agenda when it was
defined as sustainable development with
the formal definition being put forth by
the World Commission on Environment
and Development (WCED). This definition
has a strong economic focus with human
well-being and equity at the centre: equity
for both the present and future generations.1 From here forward, the usage and
definition had a strong economics and
development focus. Governments, policymakers, civil society organisations, and
academics use sustainable development
extensively and interchangeably with
sustainability.
Human society is at a critical juncture
in its history where it is becoming pivotal
to its existence to understand that the
idea of sustainability extends beyond sustainable development. With the focus on
development, sustainability has come to
mean economic sustainability as defined
by an industrial, market economy encompassing industrial/post-industrial societies. It must therefore be recognised that
sustainability has cultural, ethical and
spiritual dimensions and the ideas of justice, equity and fairness must encompass
all societies on the planet along with
non-human living species. Understanding
sustainability means recognising the fragility of the social-ecological interlinkages.
Human life is inextricably bound to
other life forms and taking action without understanding these linkages can
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cause profound disturbances for


human society and other living species.
Some would also argue for a moral imperative in this context: the anatomically
modern human species have existed
only for close to 2,00,000 years and
through our activities (particularly over
the last 250 years) we are profoundly
affecting life forms and a planet which has
existed for billions of years (Harari 2015).
Do we have the moral right to do this?
Sustainability is thus a complex and
textured idea that is multidimensional
and elusive to define. The issues we face
today, for example, the impact of human
activity-induced climate change and ways
to mitigate/adapt to the changes cannot
be understood only through the lens of
ecology or the natural sciences. The
spatial and temporal scales of the phenomena are global, interlinked, long-term
and unpredictable. The impacts are often
due to political and economic decisions
that are taken not based on scientific
understanding. The negative effects of
these actions are often not immediate or
obvious but when they occur they can
cause irreversible damage. To illustrate:
the rise in sea levels threatening existence of island nations and populations
in coastal areas. Fossil fuel-powered
economic growth of industrial nations
over the last 60 years has contributed to
global warming. One of the manifestations of it is the rise in sea levels, affecting lives and livelihoods of human
societies and integrity of natural ecosystems in distant island nations; an
effect that is now irreversible. The geopolitical nature of these challenges is
becomingly increasingly evident. The
same fossil fuel-based economic growth
has also led to the wars over oil that in
turn are impacting national and global
security as evident from the extreme
violence and the ongoing humanitarian
crisis in Southwest Asia.
The complexity of the idea of sustainability, therefore, requires an interdisciplinary and systemic view. It requires
collaboration by crossing boundaries
within the natural sciences as well as
across natural and social sciences. It also
means recognising that there are multiple ways of knowing: conventional or
orthodox science needs to recognise

vol lI no 28

and draw from commonsense knowledge,


based on lived experience and inherited
skills of living and making (Funtowicz
and Ravetz 1993). The challenges of the
present and future thus demand a transformation in the way we understand and
take action.
Given this context, the next few sections will explore the role of science and
technology; of scientists, and how there
is a need for re-imagination of the idea
of sustainability.
Science and Technology
Science seeks to explore nature using
well-established, clearly defined methods.
It seeks to replace dogma with observation and reason. In the context of sustainability, science explains natural phenomena and the effects on natural systems
as a result of the transformations caused
by human action. It does this by providing an understanding of the cause(s),
effect(s), as well as the nature and magnitude of the impacts of these phenomena and transformations. Science also
provides data and knowledge that can be
used to develop appropriate, timely and
relevant responses to various phenomena.
Technology, drawing from science, allows
human society to use nature and natural
resources to sustain, support and transform human life in myriad ways. It has
been used by human society to survive in
and adapt to a range of physical conditions, experience well-being and where
necessary to mitigate the impacts of
various changes that take place in the
environment. In doing this, technology
has created a profound impact on the
environment.
Science, and as a result technology,
has been constantly evolving and responding to challenges as they change
through history: whether it is a cure for
every new disease; new materials to meet
human needs; new sources of energy;
new ways to maximise food production,
access water or ways to treat contaminated water/soil. Science has enabled
the human mind and, in turn, human
society to steadily advance in the certainty of its knowledge and its control of
the natural world.
The approach used by science in its
study of the complex natural world is
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INSIGHT

reductionist: trying to understand the


complexity by breaking each system down
to its constituent elements and studying
them. This in turn led to the creation of
multiple disciplines and extensive specialisation which in its purest form
expands human understanding.
The science that guides the dominant
world view today has its roots in early
17th century Europe, in the movement
spearheaded by Francis Bacon and Rene
Descartes: a movement that strongly
propounded a view of natural science
leading humans to be lords and possessors of nature.2 It accorded reason and
logic a superior status compared to other
faculties such as creativity and imagination. The global, industrial system which
is the dominant world view at present is
sustained by a belief in the omnipotency
of technology: a belief and practice that
has transformed the environment, and
continues to transform well into the future,
at a pace that has exceeded any transformation process in the geological past.
Modern science and technology has
led to improved health, increased longevity of humans, and innovative ways
of maximising human comforts from
natural resources. However, some people
and societies have benefited more from
this than others and more importantly
at the cost of others. Take for instance
the impact of increased access to private
transport. As more and more people are
able to afford multiple cars and/or
motorcycles, the air quality of a lot of
cities has deteriorated significantly: the
deteriorating air quality in Beijing and
New Delhi are cases in point. While the
more affluent can protect themselves in
air-conditioned cars/homes/offices there
are large sections of the population who
are facing irreversible damage to their
health because they cannot afford this
form of insulation or protection. Similarly, regional events such as the atmospheric haze over the whole of South-East
Asia due to forest fires in Indonesia are
often caused by the clearing of forests by
industry for red palm oil plantations.
These plantations are established by
large corporations to meet the worldwide demand for this cheap source of
fat. The impact, however, of this worldwide demand is being felt largely by the
32

population of Indonesia, Malaysia and


Singapore: more significantly by sections
of society who are economically marginalised. At the global level, phenomena
such as depletion of the ozone layer, ecological and human health implications
due to release of genetically modified
food and human activity-induced climate
change are creating debilitating impacts
in places far removed from the source
of the actions that caused them. While
science can explain the cause and effect
of a number of these phenomena, information on their potential long-term impact
and risk is typically based on predictions.
To the layperson and even to policymakers
this uncertainty is difficult to comprehend as it seems intangible and too far
into the future to make a decision about.
However, what needs to be understood
that there is enough evidence to indicate
that there are long-term risks to human
life and the planet.
Another significant aspect of modern
science (or scientism), in the context of
sustainability, is its domination over all
other world views and ways of knowing:
knowledge and skills based on and
inherited from lived experience and coexistence with the surrounding environment while deriving food, shelter and all
other human essentials. In doing so, it
has led to significant erosion of a knowledge and skill base that not only allowed
human society to adapt to erratic and
uncertain environmental conditions but
also use resources with an appreciation
of the needs of future generations.
What is increasingly being questioned
therefore is whether modern science
and the scientific approach alone is the
best way to approach our present and
future? How can science, technology
and the scientist be part of an egalitarian, democratic and inclusive approach
to developing a sustainable future?
Science and the Scientist
Science and technology have a pivotal
role in helping society understand both
the problems it faces and identify appropriate solutions. A lot of the phenomena
that we see unfolding around us today,
be it air pollution, water and soil contamination, depleting groundwater, industrial
accidents, ozone layer depletion or climate

change, were first identified by scientists.


Science provided us with robust data
and rigorous proof of many of the above
occurrences. Finding ways of resolving
them also requires a robust scientific
understanding. Technology, as discussed
earlier, has been used in many cases to
find multiple ways of addressing many
of these problems effectively at a given
time and location. At this point it is
important to recognise that technology is
critically dependent on the natural ecosystem for its effectiveness: uninterrupted
supply of fresh raw materials, energy,
water and other resources for technology
to manifest, require that the natural ecosystem be sustained. Hence, perturbations
of the ecosystem in which it is embedded
pose a risk to technology itself.
The scientists role in society has been
to share data and information emerging
from research. This is in the form of scientific publications, providing advice, counsel/
expertise to governments to examine the
implications of various policy options,
communicating findings to citizens at large
through all forms of media and participating in advocacy with civil society
organisations. Scientists are typically
expected to provide credibility, independence and objectivity in a discussion. In
trying to protect this image, most scientists, barring a few, have stayed away
from advocating specific actions that
could contribute to sustainability.
In the new environment where we are
faced with novel, intense, complex phenomena, uncertainty and risk, the scientist is being called upon to engage more
extensively with a broad range of people
and take on a more public role. For example, in the 1990s the fact that a crop could
be genetically modified to make it more
resistant to pests and thereby improve
its yield was considered a statement
with a scientific basis but today it has
significant policy implications. Scientists
are called upon to take a public position
on the issue of genetically modified
foods, advocate specific options given the
risk of long-term impact, or weigh in on
a precautionary approach since it has
ethical and moral implications.
Communication of scientific information in a timely, easily accessible and
relevant manner is becoming critical.

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While discussing the urgency of science


communication in the context of climate
change, Naomi Oreskes, History of Science
at Harvard University says:
Scientists have systematically underestimated
the threat of climate change. We suggest that
they have done so for normative reasons: The
scientific values of rationality, dispassion,
and self-restraint lead them to demand
greater levels of evidence in support of surprising, dramatic, or alarming conclusions
than in support of less alarming conclusions.
We call this tendency erring on the side of
least drama (Oreskes 2013).

What is therefore clear is that the scientific approach does not necessarily
lead automatically to sustainable ways
of addressing the various environmental
phenomena unfolding around us. Science
needs to move away from the conventional reductionist and fragmented approach of an expert giving advice to
others. Science, the scientist and the
technologist need to be an integral part
of a systemic and humanistic approach.
They need to work together with and learn
from communities that have adapted to
face major shifts in their environment.
Any solution or way of understanding
and resolving an issue must be done collectively with the affected communities.
Lens of Climate Change
Climate change is not a problem waiting for
a solution. It is an environmental, cultural
and political phenomenon that is reshaping
the way we think about ourselves, about
our societies and about humanitys place on
Earth.
Michael Hulme, International climate
change scientist and public commentator.

Today, all discussions around sustainabilitypolitical, cultural, scientific, socialare subsumed within the frame of
climate change. This article would not be
doing justice to this discussion if it did not
view the challenges to science and scientists through the lens of climate change.
Climate change started as an environmental issue based on research data on
greenhouse gases and global warming in
the 1980s. It was observed, quantified and
measured purely as a physical phenomenon by scientists. For most people,
including policymakers, it was a phenomenon whose impact would be felt far
into the future, there was a lot of uncertainty on the scientific understanding of
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the phenomenon itself and the contribution of human activity in accelerating


the phenomenon.
In 1992, at the Earth Summit in Rio,
the signing of the United Nations Framework Convention on Climate Change
(UNFCCC) witnessed the first international
response to climate change, recognising
it as a phenomenon that needed immediate
attention. From here on climate change
became a development issue but the discussion and discourse was restricted to
global forums, scientific meetings and
academic discussions. One of the most
definitive steps to reduce carbon emissions and global warming as an approach
to address climate change was taken in
the form of the Kyoto Protocol in 1997.3
However, the United States (US), the
largest contributor to global warming at
that time, refused to support and ratify
the Protocol even though James Hansen,
National Aeronautics and Space Administrations (NASA) top climate scientist had
first warned the US Congress about
climate change in 1988. More recently,
another top contributor to global warming, Canada rejected the Protocol.
By the early 2000s, climate change
began to be recognised as an economic
and geopolitical issue of national and
global security with the oil wars, the
search for alternative sources of energy
including renewables on the one hand
and shale oil and gas on the other. More
recently in 2015 the ethical, moral, and
social justice dimensions of climate change
have received significant attention by
religious institutions like the Catholic
Church. The Popes Encyclical on Climate
Change and the Environment is calling
upon humanity to recognize the need
for changes of lifestyle, production and
consumption, in order to combat this
[global] warming or at least the human
causes which produce or aggravate it.4
The science around climate change and
its linkage to global warming is clear.
There is also strong scientific consensus
about the increase in global surface temperature in recent times being caused by
human-induced emissions of greenhouse gases. This was clearly articulated
in the Climate Conference in Paris in
December 2016. However, in popular
media and political platforms there

vol lI no 28

continue to be disputes over the causes


of global warming and their long-term
impacts. Scientific debates around the
sensitivity of climate systems to specific
levels of greenhouse gases and the spatial
and temporal consequences of global
warming are often reflected in public
disputes and used strategically for politically and/or economically motivated
reasons. This creates confusion in the
minds of the public leading to disengagement with the issue, often leading
to inaction. The question therefore is: Is
there a moral imperative/responsibility
for scientists to enable more people to
actively engage and participate in a process that will reduce the damage to the
ecosystem, as well as create equity and
enable social and ecological justice?
If there is then what should be done
and how?
The challenge of climate change that
it is not a discreet problem for which a
direct scientific or technological solution
can be provided and solved for example,
replacement of a toxic pesticide with a
less toxic substituent or natural pesticide
can over a period of time solve the contamination problem and the contaminated area can be decontaminated using
technology. The residual carbon dioxide
in the atmosphere accumulated over
hundreds of years will impact generations to come. It requires draconian
measures to be taken assiduously to ensure negative carbon emissions which
means transforming the way we live and
see our present as well as future. As discussed in Section 3.0 of this article, the
impact of climate change like all other
natural or anthropogenic events, is strongest on the economically vulnerable.
There is a geographic, political, economic separation between those causing the
problem and the affected.
Science and the scientist therefore
need to be part of a larger, inclusive and
collective effort. They need to draw on
their skills of analysis and reasoning to
form peer-communities where scientific
expertise and local communities directly
affected by the changing conditions sit
at the same table. This will lead to a
shared understanding of the situation
and development of locally relevant adaptation strategies. In the authors own
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INSIGHT

experience, this kind of an approach


leads to creative and innovative adaptation strategies emerging from the local
experiential knowledge of the communities. The learnings from such effort can
then be used by scientists in dialogues
with policymakers, social scientists and
the general public. This creates communities of practice and knowledge bases
which are critical in enabling strategies
of resilience for the future.
At this point it is important to briefly,
juxtapose this discussion with the formal outcome of the Climate Change
Conference of Parties (COP) 21 held in
Paris in December 2016. All participating governments agreed that all possible
measures must be taken to keep the
average temperature on the Earths
surface from exceeding 2C above preindustrial temperatures. However, the
dominant solutions proposed were once
again industrial technological solutions
to achieve this objective. There was no
serious commitment to making economies fossil-free. This led James Hansen,
NASAs top climate scientist (who first
warned about climate change in 1988)

to declare that the way forward was


wrong and that draconian elimination
of fossil fuels was the only way to prevent catastrophic global warming. Social movements and representatives of
indigenous communities from all over
the world who had wanted to share their
efforts to adapt to and mitigate climate
change impacts were not accorded any
place in the deliberations.
In this conflicting situation science
and scientists thus have an even greater
responsibility to advocate and work
towards the collaborative and inclusive
approach that this article has been urging.
Challenges
In this period of, what some researchers
term, post-normal science (Funtowicz
and Ravetz 1993), science and scientists
must (i) continue to provide rigorous
empirical evidence, (ii) step out of discipline boundaries to actively collaborate
in a democratic process of learning and
collective exploration of solutions to
problems, and (iii) be advocates for specific actions in education and decisionmaking that will enable sustainability.

The first step in any collaborative


engagement is to know and understand
the partners/collaborators. Scientists have
to engage with a range of people: professionals in interdisciplinary teams (natural and social scientists, technologists,
architects, planners, lawyers, artists, writers, etc), policymakers (politicians, technocrats and administrators), judiciary,
civil society organisations, religious
leaders, the general citizenry and increasingly, the media (print, television
and social media). The traditional approach of scientific communication has
been a one-way delivery of information.
Interpretation is, by and large, done
with deep caution with scientists typically being wary and circumspect about
recommending particular actions as
possible solutions to a problem.
In the context of sustainability, scientists are increasingly being required to
recommend actions, particularly in the
policy realm, because they are well positioned to do so. They can use science to
lay out the potential impacts of various
policy options which will enable a more
informed decision-making. It is all the

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34

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INSIGHT

more significant in a country like India


with diverse cultures, livelihood systems
and the existence of experiential knowledge systems that do not find a place in
the mainstream education or scientific
discourse. The ongoing agrarian crisis in
India and the long-term food security of
the country is one such complex situation where scientists need to engage actively with diverse viewpoints and experiences to contribute to a sustainable
long-term policy for the country. Dominant, technology-driven food production needs to be viewed in the context of
land, water and seed politics. Scientists
need to collaborate with peasants and
build on the latters experiential knowledge of agroecological practice-based
resilient food systems. This has been
done through collective learning and
close collaboration between scientists
and peasants in Cuba to build a robust,
sustainable food system that is not fossil
fuel based. The learnings from this collaboration are being shared across Latin
America (Altieri 2016). Such collaborations become even more of an imperative now when the fossil fuel dependent
modern food systems are threatened by
the manifestations of climate change.
The public is also seeking clarity in
the face of uncertainty and seemingly
conflicting scientific statements regarding health impacts of various foods and
more recently that of climate change
that are put out in the media from various sources. This can only be resolved
through dialogue between scientists
and citizens.
Present and future challenges demand
that strategies and actions be arrived at
in context and this is where dialogue is
critical. More often than not, policymakers and state-run programmes adopt a
one-size-fits-all approach using technology as the solution to a problem. Politically and administratively it appears to
be more effective: technological solutions are quicker to implement unilaterally, they give an impression of decisiveness and accomplishment compared to a
more relevant and sustainable solution
arrived at through dialogue with the
affected community. The latter is more
time-consuming. What is increasingly
being understood is that technology is
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only part of the solution. An integrated


and complete solution requires an understanding of the local social, economic,
ecological and political context of the
problem and has to be arrived at in context. For this the affected population and
the scientist have to sit at the same table,
learn from each other and arrive at a
solution through a democratic process.
Another issue that a lot of scientists
have been grappling with is their role in
advocacy. Does advocating a specific action compromise the credibility of a scientist? Many in the scientific community
feel very strongly that scientists must
take on an advocacy role, particularly
when there are ethical conflicts. In India,
we have seen reputed, leading senior
scientists, for example, molecular biologist Pushpa Bhargava, ecologist Madhav
Gadgil and nuclear scientist and engineer
A Gopalakrishnan take strong and public positions on issues such as moratorium on genetically modified foods, community-led conservation in ecologically
fragile areas, and Indias civilian nuclear
programme, respectively. In December
2000, when Nobel laureate chemists
Mario Molina and Sherwood Roland
were questioned about their move from
the laboratory to advocacy in the context of the ozone layer depletion this was
their response:
Molina said,
Is it enough for a scientist simply to publish
a paper? Isnt it a responsibility of scientists,
if you believe that you have found something
that can affect the environment, isnt it your
responsibility to actually do something about
it, enough so that action actually takes place?

Rowland concluded the lecture by:


If not us, who? If not now, when?

An advocacy role for science has also


been urged in the editorial to the journal,
Conservation Biology, in 1989.
Science must take on an advocacy role with
respect to environment. If science does not,
we deserve and can expect the future censure of society, for indeed it is our responsibility as those who understand best what
is happening and what alternatives exist, to
sound the tocsin about environmental deterioration and conservation problems in all
their variety.

History of science researchers like


Naomi Oreskes are critical of the belief

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held by many scientists that in being rational they cannot advocate a solution or
approach in a credible and rational manner. Oreskes (2013) urges scientists not to
link rationality to dispassion; instead to
be the sentinel, particularly in the context of climate change.
Science and scientists also have a public role in education. The mainstream
education system is based on the reductionist approach to problem-solving. The
challenges of the present and future demand a re-visioning of this education
and learning process. Science must be
demystified and become inclusive and
integrative of all ways of knowing and
learning if it is to enable a sustainable
world view.
Notes
1

2
3

Development that meets the needs and aspirations of the present without compromising the
ability of future generations to meet their own
needs (WCED 1987).
Rene Descartess words in Discourse on Method.
Originally published in 1637.
The Kyoto Protocol is an international agreement linked to the United Nations Framework
Convention on Climate Change, which commits
its parties by setting internationally binding
emission reduction targets. Recognising that
developed countries are principally responsible
for the current high levels of GHG emissions in
the atmosphere as a result of more than 150
years of industrial activity, the Protocol places
a heavier burden on developed nations under
the principle of common but differentiated responsibilities. The Kyoto Protocol was adopted
in Kyoto, Japan, on 11 December 1997 and entered
into force on 16 February 2005. The detailed
rules for the implementation of the Protocol
were adopted at COP 7 in Marrakesh, Morocco,
in 2001, and are referred to as the Marrakesh
Accords. Its first commitment period started
in 2008 and ended in 2012. (Source: http://unfccc.int/kyoto_protocol/items/ 2830.php).
Popes Encyclical on Climate Change and the
Environment, http://w2.vatican.va/content/
francesco/en/encyclicals/documents/papafrancesco_20150524_enciclica-laudato-si.html.

References
Altieri, M (2016): Cubas Sustainable Agriculture
at Risk in US Thaw, The Conversation, 25 March,
https://theconversation.com/cubas-sustainable-agriculture-at-risk-in-u-s-thaw-56773, acce
ssed on 28 March 2016.
Funtowicz, S O and J R Ravetz (1993): Science for
the Post-normal Age, FUTURES, September.
Harari, Y N (2015): Sapiens: A Brief History of Humankind, Harper Collins.
Hulme, M (2009): Why We Disagree About Climate
Change, Cambridge University Press, UK.
Morelli, J (2011): Environmental Sustainability: A
Definition for Environmental Professionals,
Journal of Environmental Sustainability, Vol 1,
Issue 1.
Oreskes, N (2013): The Scientist as Sentinel, Limn,
Issue No 3, June.
World Council for Environment and Development
(1987): Our Common Future.

35

SPECIAL ARTICLE

Measurement of Regulations of the Agricultural


Produce Markets
An Application to Indian States
Purnima Purohit

Effective regulation of agricultural produce markets has


been increasingly recognised as an important institution
for agricultural sector development. This article provides
the construction of a composite time-varying de jure
quantitative index measuring a specific legislative
institution of colonial lineagethe Agricultural Produce
Markets Committee Act & Rules across 14 Indian states
for the period 19702008. Rankings of states in terms of
the APMC index show varying time trends: Maharashtra
and Punjab witness a stable and high ranking
historically. The top gainers in terms of ranking are
Karnataka and Madhya Pradesh. The top losers in terms
of ranking are Bihar, Gujarat and Odisha. Gujarat and
Bihar ranked at 6th and 12th position respectively in
1970 but their ranks deteriorated to 11th and 14th
position in 2008. Uttar Pradesh, West Bengal and Assam
show relative improvement in terms of magnitude of the
APMC index but continue to rank poorly. Haryana, Andhra
Pradesh, Tamil Nadu and Rajasthan maintained ranks at
the higher side most of the time period.

ver the 20th century, economists have come up with a


number of ways of evaluating economic institutions that
cannot be observed directly. A distinct contribution of
the kindand the focus of this articleis the measurement of a
specific economic institution of post-harvest agricultural produce
markets of Indian states: the Agricultural Produce Markets Committee Act (hereafter, APMC Act & Rules), which has so far received relatively little attention in the measurement literature.1
The role of APMC Act & Rules in Indian agriculture has been
on the political agenda for many years. The goal of government regulations overseeing the market is to offer incentives
to producer farmers, correct market failures and augment
social welfare. The legal and administrative framework with a
well spread-out regulated infrastructure of agricultural produce markets are important determinants of how well markets
function. The level of regulatory governance affects outcomes
of the marketing system, which in turn can be expected to
impact on economic growth of agricultural sector (Cullinan
1999; Fafchamps et al 2008; Minten et al 2012). In other words,
state agricultural development in the states is contingent upon
efficient regulated marketing system (Acharya 2004).
There is a wide variation in the agricultural performance of
different states. The computed quantitative APMC index and its
sub-indices are useful measures to compare the competitive
situation of agricultural produce markets in 14 states of India,
allowing the identification of problematic aspects and dimensions of legal provisions that deserve attention by policymakers for improvement in the states. This article tries to construct multidimensional index that systematically measures
the post-harvest agricultural marketing state law, APMC Act &
Rules for select 14 out of the total 28 states of India for the
period 19702008.2 In particular the states considered for the
analysis are: Andhra Pradesh, Assam, Bihar, Gujarat, Haryana,
Karnataka, Madhya Pradesh, Maharashtra, Odisha, Punjab,
Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal.
1 Meaning and Scope of Regulations

The author is grateful to Kunal Sen and Katsushi Imai, University of


Manchester, UK; M S Jairath, NIAM, Jaipur; and S Mahendra Dev,
IGIDR, Mumbai, and an anonymous referee for discussions and inputs.
The views and errors are solely authors responsibility.
Purnima Purohit (purnimapurohit@gmail.com) is postdoctoral research
associate at the University of Glasgow, Scotland, UK.

36

The concept and scope of regulations of the agricultural markets


in the form of APMC Act & Rules in the Indian states is derived from
Dahl (1979) which highlights three types of government involvement in the economic market system of agricultural produce:
(i) The full pattern of government intervention in markets through
legislative and administrative rules, whereby government
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defines the scope of economic transactions in markets, attempting to encourage, constrain or facilitate operational aspects of
the market economy. (ii) Political activities that cause government entities to be co-participants with business as users of
economic resources. (iii) The range of administrative government controls defining the operation of a private market economy
or direction of certain economic decisions.3
In the research, the APMC index is conceived as based on the
normative economics (as opposed to positive economics) to
consider the role of state functioning for economic and social
fairness.4 In about 50 years, state agricultural markets have
shed their colonial administrative structures and evolved to
possess Indian characteristics. Present agricultural market
institutions are steadily reworked through reforms by the state
as part of the modernisation and progressive growth of India.
Therefore, in the conceptual institutional framework of this
research, institutions such as the APMC Act are meant to offer
those arrangements that promote broad-based growth by
maximising the growth potential of the society as a whole
(Acemoglu 2003). It influences (directly and indirectly) cost of
exchange and production, alters preferences of actors and
serves interest group by provisions provided and enforced
codes of conduct to a considerable degree.
The APMC index is based on variables from de jure (in law)
set of indicators in place of the de facto (in practice) set of
variables to construct a measure of the APMC Act & Rules. The
choice of de jure (rules based) indicators controls biases both
for and against a particular state. It also limits selection
of spurious indicators of the APMC Act, driven by personnelspecific political or ideological biases or beliefs that experts
assessments may have. It also allows distinguishing objective
indicators easily from the outcome indicators of the APMC
Act & Rules.
The de jure APMC index is a time-varying multidimensional
construct. It is obtained by combining six different regulatory
indices that measure one distinct regulatory dimension of the
APMC Act and Rules. They are: (i) scope of regulated markets;
(ii) constitution of market and market structure; (iii) regulating
sales and trading in market; (iv) infrastructure for market
functions; (v) pro-poor regulations; and (vi) channels of
market expansion. Each of the six indices (sub-indices) is constructed based on 36 variables classified from state-specific
APMC Act & Rules and other supporting agricultural marketing-related information evolved over the period of 38 years
(19702008). The work treats the composite APMC index as a
latent, continuous variable, where selected indicators are seen
as a function of the APMC Act and Rules.
2 Coding and Measuring APMC Act & Rules:
Classification of Variables

The New Model APMC Act & Rules (2003) is used as the baseline model act & rules for the classification of the core legislative measures (variables) in the construction of APMC index.5
The historical background of regulated markets in the states
guides to interpret the marketing law analytically.6 Each
states APMC Act corresponds with state APMC Rules. The
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July 9, 2016

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rules are a blueprint to implement the clauses of the act which


simply outlines how regulated markets are to be established
and function. This means that the act is enforced only if the
rules exist. In most agricultural regulated markets, subject to
the provisions of the APMC Act and the Rules, a market committee may frame by-laws on any matter for effectively implementing the provisions of the APMC Act and Rules. This work
focuses on the states principal APMC Act and its rules.
The Agricultural Produce Markets Act & Rules in different
states differ in vital contents across the states, indicating
towards persisting tendency of underlying path dependency of
institutions. This provides for identification and variation in
the variables across states over time in the index construction.
The APMC Act & Rules of the selected 14 states are compared
and quantitatively coded to draw variables, which capture
differences in administrative design, ways of efficiency in
trading, special protection to disadvantaged farmers, and
market orientation of agricultural sector as a whole to increase
agricultural income and attain economic welfare.
With the New Model APMC Act (2003) as the baseline law, a
legal clause in the states APMC Act & Rules is scored either one
(+1) if a legal provision exists in the states APMC Act & Rules or
zero (0) if a legal provision does not exists in the states APMC
Act & Rules. Such classification of legislative measures allows
codifying the level of the APMC Act & Rules across states. It
distinguishes between states having different levels of APMC
Act and Rules over the time. It is useful to give an example to
demonstrate this coding procedure. A sample of positive regulatory market clause is from Rajasthan on terms and procedure of buying and selling (Section 15D (2 ac) of the act
1961). The clause reads the following:
Section 15D(2-a) of the Act, 1961 reads: The price of agricultural
produce brought in the principal market yard or sub-market yard or
private sub-market yard shall be paid on the same day to the seller
in principal market yard or sub-market yard or as the case may be,
private market yard
Section 15D (2-b) of the Act, 1961 reads: In case purchaser does not
make payment as specified under clause (2a), he shall be liable to
make payment within five days from the date of purchase with an additional amount at the rate of 1% per day of the total price of the agricultural produce payable to the seller
Section 15D(2-c) of the Act, 1961 reads: In case the purchaser does
not make payment as specified in clause (b) within the said period of
five days, his licence shall, without prejudice to his liability under any
other law, be deemed to have been cancelled on the sixth day and he
shall not be granted any licence or permitted to operate in a market
area as any other functionary under this Act for a period of one year
from the date of such cancellation.

Out of the acts of the 14 states that are read, here Rajasthan
gets a code of plus one in the data set since 1963. The rules to
enforce the act were framed in 1963 satisfying three identified
variables: (i) provision of payment to grower/seller on the
same day; (ii) provision of interest payment over the delayed
payment and (iii) penalty for default payment. In comparison,
except for Madhya Pradesh and Karnataka that included similar clauses in 1986 and 2007 respectively, other states act excluded clauses on interest over the delayed payment and penalty
for default payment, and in this case these states included only
37

SPECIAL ARTICLE

provision on point (1) of payment to grower/seller on the same


day. So these states get zero on two of the three legal aspects.
Next, the complete set of variables on regulations is discussed that are taken to measure six dimensions of the APMC
Act & Rules of 14 states of India. In this section, the discussion
on the variables are based upon two sources: (i) government
commissioned research documents and (ii) semi-structured
interviews-cum-discussions with government officials at Directorate of Agricultural Marketing and Inspection, Ministry of
Agriculture, Government of India, New Delhi and National
Institute of Agricultural Marketing, Government of India,
Jaipur, held during JanuaryJuly 2011.
Six Dimensions of the APMC Act & Rules

(1) Scope of Regulated Markets: This dimension conceptually characterises the spread of the regulated markets as well as
the sufficiency (against shortage) of the markets in the state. It
is measured by the following two variables:
(i) Average area covered by each regulated market in sq km
measures the density of market to assess if farmers have to
travel far with their produce to avail the facility of regulated
market (Acharya 2004). It is calculated by: state area in square
kms/total regulated markets in the state. A large market area
indicates lesser number of market yards in the vicinity of production area in the state. The state receives the lowest score on
this variable that has the largest market area after standardisation of raw score. The score for each state is computed yearwise for 38 years.
(ii) Population served by each regulated market per thousand
people measures the adequacy of number of markets in a
state to serve the public efficiently. Larger population implies
considerable congestion in market yards that may lead to
undue delays in the disposal of the farm produce resulting in
long-waiting period and low returns. It is calculated by: total
state population per thousand/total number of regulated
markets. The score for each state is computed year-wise for
38 years.
(2) Constitution of Market and Market Structure: This
dimension conceptually characterises the level of democracy
in the regulatory set-up which equitably represents diverse interests involved in sale and purchase of agricultural produce.
It is measured by the following seven statutory clauses verified
from the act where an observed variable:
(i) Equals 1 if composition of market committee takes place
through a provision of direct election; otherwise 0.
(ii) Equals 1 if the chairman of the market committee is agriculturalist; otherwise 0.
(iii) Equals 1 if the chairman of the market committee is an
elected chairman; otherwise 0.
(iv) Equals 1 if a provision to dismiss the chairman of the market committee exists; otherwise 0.
(v) Equals 1 if a provision to suspend the market committee
exists; otherwise 0.
(vi) Equals 1 if a provision to suspend the market committee
exists; otherwise 0.
38

(vii) Equals 1 if the state marketing board has legal status;


otherwise 0.
(viii) Equals 1 if a website of the state marketing board exists;
otherwise 0.
(3) Regulating Sales and Trading in the Market: This
dimension conceptually characterises the level of regulatory
provisions of the regulated marketing system to foster the
market orientation for Indian farmers. The sales and trading
sub-index is measured by the following six statutory clauses
verified from the act where an observed variable
(i) Equals 1 if single point levy in the market area exists;
otherwise 0.
(ii) Equals 1 if law mandates sale by open auction in the
market; otherwise 0.
(iii) Equals 1 if law mandates payment to growerseller on the
day of sales in the market; otherwise 0.
(iv) Equals 1 if law offers provision of agricultural inputs
(including stocks of fertiliser, pesticides, insecticides, improved
seeds, agricultural equipment, etc) for sale in the regulated
produce market; otherwise 0.
(v) Equals 1 if law mandates for issuance of a sale-slip (receipt)
to the seller; otherwise 0.
(4) Infrastructure for Market Functions: This dimension conceptually characterises the level of physical marketing
infrastructural facilities and services provided by the state
governments. Some of the infrastructural provisions provided
by central government are also included in the index. Corporations, such as Food Corporation of India (FCI) and Central
Warehousing Corporation (CWC), though union governments
organisations, serve all the states of India and operate on behalf
of both the central and state governments to facilitate the
management of food procurement and distribution throughout the country. This dimension is measured by the following
six variables, based on data collected from the Bulletin on Food
Statistics, Directorate of Economics and Statistics, Ministry of
Agriculture and Directorate of Agricultural Marketing and
Inspection, Ministry of Agriculture.
(i) Number of central warehouse available per 1,000 sq km,
calculated as (number of central warehouse/land area sq km
1,000) to measure adequate availability of number of scientific
storage facilities for foodgrains of per 1,000 sq km in the state.
The state having higher number of storage facility at a shorter
distance implies that the market operation serves the interests
of both the farmers and consumers better as compared to
other states. The state receives highest score on the variable
amongst all states after standardisation of raw score. Accordingly, the score for each state is computed year-wise.
(ii) Central warehouse capacity available in tonnes for
per 1,000 mt production, calculated as central warehouse
capacity/total agricultural production 1,000, to measure
marketing function of availability of scientific storage capacity
per 1,000 mt production of agricultural produce in the state.
(iii) Number of state warehouse available per 1,000 sq km, calculated as number of state warehouse/land area sq kms 1,000,
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SPECIAL ARTICLE

(5) Pro-poor Regulations: This dimension conceptually characterises pro-poor regulatory environment to ensure social
justice to small and marginalised farmers. The law recognises
that owing to unscrupulous practices by certain sectors of
traders, special regulations in the regulated markets are
required. It is measured by the following three statutory clauses verified from the act where an observed variable
(i) Equals 1 if law offers provision where buyer is liable to
make additional payment over the actual due amount as an
interest payment, if the buyer at first trade transactions fails to
make immediate cash payment to the seller; otherwise 0.
(ii) Equals 1 if law offers a provision of penalty on a buyer who
is a defaulter in making payment (both principal and interest)
to the seller within the specified period; otherwise 0.
(iii) Equals 1 if law offers a provision of maintaining market
stability allowing the state government to adopt special measures
by passing an order to correct an immediate market problem or
to give effect to the provisions of the act, subject to providing
reasons in the order; otherwise 0. For instance, Section 64 BC
of the Act 2007 in the act of Karnataka mandates that no bid
during the market auction shall be permitted to start below the
price of notified agricultural produce in the market yard of
which minimum support price (MSP) has been declared by the
state government. A score of 1 is given in each year if a provision
of market stability in a prescribed manner exists, 0 otherwise.

with among other channels in the state. It proxies for level of


agribusiness by legally empowering the private sector to establish
alternative agricultural markets and encourages publicprivate
partnership at the management level to increase efficiency.
This sub-index captures mostly revamped clauses of the latest
New Model Act entitled the State Agricultural Produce
Marketing (Development and Regulation) Act, 2003 which was
circulated to the states by the Union Ministry of Agriculture to
make amendment in their respective state APMC Acts (Task Force
on Agricultural Marketing Reforms, 2001). By 2009, out of 35
states and UTs, 17 states had the provision for private market
yards, but rules have not yet been formulated by all of them.
The rules are critical to implement this aspect of the new act.7
This dimension is measured by the following eight variables:
(i) Equals 1 if the law provides a provision of single licence
facility to operate trading in any marketplace within the entire
state; otherwise 0.
(ii) Equals 1 if law provides a provision allowing a trader to
operate in more than one notified market area falling under
different market committee with a single licence; otherwise 0.
(iii) Equals 1 if the law provides provision and the corresponding rules for legally allowing setting-up of private agricultural
produce market yard in the state; otherwise 0.
(iv) Equals 1 if law provides provision and the corresponding
rules for legally allowing setting-up of private consumer-farmers market (direct marketing by the farmers in the state); otherwise 0.
(v) Equals 1 if law provides provision and the corresponding
rules for legally allowing private sector (agri-trading companies)
to establish purchase centres to undertake direct procurement/purchase of agricultural commodities from the farmers
field and to establish effective linkage between the farm production and retail chains; otherwise 0.
(vi) Equals 1 if law provides provision and the corresponding
rules to legalise contract farming in the state, recognising an
alternative form of marketing in a state; otherwise 0.
(vii) Equals 1 if law has provision of publicprivate partnership
market function to meet expenses and cost of market development through publicprivate partnership, infrastructure of
post-harvest handling, cold storage, pre-cooling facilities,
pack houses, etc, for modernising the marketing system; otherwise 0. Until 2009, out of the total states which have amended their act, only Maharashtra, Karnataka and Andhra
Pradesh have included this provision.
(viii) Equals 1 if law permits electronic spot exchange market
option to trade in agriculture commodities; otherwise 0. The
idea is that such legal option may help to reduce the cost of
intermediation and to enhance farmers price realisation,
whilst reducing the higher prices of agricultural produce for
the consumer by enhancing marketing efficiency and bringing
transparency in agriculture marketing.

(6) Channels of Market Expansion: This dimension conceptually characterises expansion of scope of agricultural market
by recognising the role of alternative marketing channels such as
contract farming, direct marketing, private markets, e-markets,

3 Construction of the APMC Index and Its Sub-indices


The APMC index is an unweighted average of a non-linear
function of the sub-indices: (i) scope of regulated markets;
(ii) constitution of market and market structure; (iii) regulating

to measure marketing function of availability of number of


state-run scientific stores within the area of per 1,000 sq km to
the users in the state.
(iv) State Warehouse capacity available in tonnes for per 1,000 mt
production, calculated as state warehouse capacity/total agricultural production 1,000, to measure marketing function of
availability of state-run scientific storage capacity for per 1,000
mt production of agricultural produce in the state.
(v) FCI storage capacity per 1,000 mt production, calculated as
FCI storage capacity/total agricultural production 1,000, to
measure marketing function of availability of scientific storage
capacity per 1,000 mt production of agricultural produce in
the state.
(vi) Number of grading units available per 1,000 sq km, calculated as number of grading units/land area sq km 1,000, to
measure number of grading units functioning in the states
within the area of per 1,000 sq km in the state. Grading standard
is a marketing function that facilitates in making the quality
specification uniform among buyers and sellers over space
and over time to enhance business viability in agriculture
(Acharya 2004).
(vii) Number of grading units available in per 1,000 mt production, calculated as number of grading units/total agricultural
production 1,000, to measure availability of grading facility for
per 1,000 mt production of agricultural produce in the state.

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39

SPECIAL ARTICLE

Construction of the Sub-indices: The six sub-indices


(i) scope of regulated markets; (ii) constitution of market and
market structure; (iii) regulating sales and trading in market;
(iv) infrastructure for market functions; (v) pro-poor regulations;
and (vi) channels of market expansionuse 36 variables as
input that were mentioned in the previous section.
The computation of the sub-index values involves four steps.
First, raw data on selected variables are normalised either by
size of the state in terms of its area, population, food production or all in some cases to enable comparison between large
and small states of India on selected variables. Second, the
standardisation of the original variables scaled on different
measurement unit in the data set is executed. All variables that
are not dichotomous variables (0 and 1) in the data set are
adjusted to a unitless measurement scale by the application of
40

Figure 1: APMC Composite Index by State


.6

Andhr
Andhra Pradesh
Pradesh

Assam

Bihar

Gujarat

.4
.2

0
.6
.4

APMC index

sales and trading in market; (iv) infrastructure for market


functions; (v) pro-poor regulations; and (vi) channels of
market expansion. Its values are between 0 and 1 with the
index value 1 corresponding to optimal level of regulations
and the value 0 to inferior level of regulations of the agricultural markets.
The non-linear function arises because the APMC Act has a
governing impact on sustaining higher levels of agricultural
productivity. In the absence of proper marketing machinery to
ensure a fair return to the producer, creditable success achieved
by the post-independence production programme suffer more
than proportionately and thereby potentially jeopardise countrys food security and well-being of majority of population in
the states. Thus, suboptimal legal and administrative framework is penalised in every dimension of the APMC Act. Also,
the non-linearity has the advantage that the APMC measure
allows only for partial compensation among its components.
Partial compensation implies that low performance in one
sub-index, can only be partially compensated with better
performance on another sub-index. Technically, the nonlinearity in the index is achieved by squaring the distance of
the respective subindex to 1, optimal level of legal framework.
It implies that sub-index with low values get much lower score
on the composite than the sub-index with values close to 1.
Smaller values of sub-indices lead to penalisation in the
APMC index which increases as the distance to 1 in sub-index
value gets wider.
The sum of the resulting squared sub-index values divided
by the number of sub-indices then gives the value of the APMC
index. This entails a choice of equal weights for the sub-indices
because there is not theoretical reason to value one of the
dimension more or less than the others. The value of the APMC
index for a given state for each year (from 1970 to 2008) is calculated as follows:
APMC Index = 1/6 (sub-index Regulating Sales and Trading in
the Market)2 + 1/6 (sub-index Constitution of Market and
Market Structure)2 + 1/6 (sub-index Infrastructure for Market
Functions)2 + 1/6 (sub-index Channels of Market Expansion)2
+ 1/6 (sub-index Pro-Poor Regulations)2 + 1/6 (sub-index
Scope of Regulated Markets)2

Haryana

Karnataka

Odisha

Punjab

Uttar Pradesh

West Bengal

Madhya Pradesh

Maharashtra

.2

0
.6

Rajasthan

Tamil Nadu

.4
.2

0
1970 1980 1990 2000 2010 1970 1980 1990 2000
.6

2010

.4

.2
0
1970 1980 1990 2000 2010 1970 1980 1990 2000 2010

Year
Source: Authors calculations.

standard min-max normalisation method (Giovannini 2008).


Third, the method of classic standard principal component
analysis (PCA) on continuous numeric variables and tetrachoric
PCA on binary (0/1) variables are used to extract the common
information of the variables that belong to a sub-index in the
form of the first principal component (FPC), which is a weighted sum of the standardised corresponding variable (Kolenikov
and Angeles 2009; Branisa et al 2010).8, 9 Fourth, the sub-index value is obtained rescaling FPC so that it ranges between 1
and 0 to ease interpretation. A state with the best possible
APMC regulations is assigned the value of 1 and a state with the
worst possible APMC regulations the value of 0. Hence the subindex values of all states are between 0 and 1.10
The APMC Index 19702008: Results

APMC Index: Based on the summary statistics of the composite APMC index and six sub-indices, the overall mean score of
the composite APMC measure begins with very low score of
0.006 that improves significantly over the period 19702008
(estimated by the difference between max and min
values) to be greater than 0.5. Nevertheless, measure evolves
very gradually over 38 years of time period and still it is
substantially lower than the optimum level for a country like
India, where agriculture is a central theme on the development agenda.
Figure 1 captures the movements of statewise APMC
measure in the period 19702008. In terms of levels and

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SPECIAL ARTICLE
Figure 2: Market Structure Dimension of the APMC Index by State
1

Andhra Pradesh

Bihar

Assam

Figure 4: Market Infrastructure Dimension of the APMC Index by State

Gujarat

.5

Haryana

Karnataka

Madhya Pradesh

Maharashtra

.5

Odisha
Orissa

Punjab

Rajasthan

Tamil Nadu

1
.5

0
1970 1980 1990 2000 20101970 1980 1990 2000 2010
Uttar Pradesh

Market infrastructure

Market structure

Assam

Bihar

Gujarat

Haryana

Karnataka

Madhya Pradesh

Maharashtra

Odisha
Orissa

Punjab

Rajasthan

Tamil Nadu

Uttar Pradesh

West Bengal

0
1

Andhra Pradesh

.5

1
.5
0

1
.5
0

1970 1980

West Bengal

.5

.5

1970

1980 1990

2000

2010 1970

1980 1990

2010

Year

Figure 3: Sales and Trading Dimension of the APMC Index by State


Andhra Pradesh

Assam

Bihar

Figure 5: Pro-poor Regulatory Dimension of the APMC Index by State

Gujarat

Andhra Pradesh

Assam

Bihar

Gujarat

Haryana

Karnataka

Madhya Pradesh

Maharashtra

Orissa
Odisha

Punjab

Rajasthan

Tamil Nadu

Uttar Pradesh

West Bengal

.5

.5

0
Haryana

Madhya Pradesh

Karnataka

Maharashtra

1
.5

.5
0
Orissa
Odisha

Rajasthan

Punjab

Tamil Nadu

.5

0
1970 1980 1990 2000 20101970 1980 1990 2000 2010
Uttar Pradesh

West Bengal

Market pro-poor

Market sales and trading

1990 2000

Source: Authors calculations.

Source: Authors calculations.

1980

2000 2010

Year

2010 1970

1970 1980 1990 2000 2010 1970 1980 1990 2000 2010

1990 2000

0
1
.5
0
1970 1980 1990 2000 2010 1970 1980 1990 2000 2010
1

.5

.5

1970 1980 1990 2000 2010 1970 1980 1990 2000 2010

1970 1980 1990 2000 20101970 1980 1990 2000 2010

Year

Year
Source: Authors calculations.

Source: Authors calculations.

change in the APMC measure, Maharashtra, Punjab, Haryana,


Karnataka and Rajasthan start on a good footing. They start
from a level close to 0.20 and improve the levels to reach
higher than 0.40 values of the APMC measure. Madhya
Pradesh, particularly, as well as Tamil Nadu and Andhra
Pradesh provide example of states that set off from a very
low-level score of the APMC measure and over time demonstrate a leap positive change in their APMC measure. For instance, Madhya Pradesh improves the measure from as low as
0.050 to as high as 0.52 in the time period. Gujarat starts at
medium level (0.199) and remains at medium level (0.274).
West Bengal, Uttar Pradesh, Assam, Bihar, and Odisha also
demonstrate some positive change from very low levels in the
APMC measure, but the APMC score in these states remains
low over the period.11

Andhra Pradesh, Haryana, Punjab, Assam, Karnataka and


Rajasthan. The mean value of each of these states ranges
above or close to the overall mean 0.55 of regulating sales and
trading in market. Worst performers are Gujarat (0.25) and
Tamil Nadu (0.27). Bihar, Madhya Pradesh, Odisha, Uttar
Pradesh and West Bengal score moderately ranging between
0.35 and 0.49.
In the sub-index infrastructure for market functions (Figure 4,
Table 1, column 7), there is considerable variation in regulated
marketing infrastructure in the states. Punjab, Haryana,
Maharashtra, Tamil Nadu and West Bengal are the best scorers.
The mean value of each of these states is significantly above
the overall mean 0.29 of infrastructure for market functions.
Punjabs mean score 0.901 tops all states. Worst performers are
Bihar (0.084), Odisha (0.082), Rajasthan (0.130), Karnataka
(0.135), Madhya Pradesh (0.145) and Uttar Pradesh (0.193).
The remaining states Andhra Pradesh, Assam and Gujarat score
between 0.21 and 0.267.
The trend movements over time in Figure 4 show that
Maharashtra and Andhra Pradesh make an improvement in
infrastructural facility over time. Trends for Gujarat show an
improvement with fluctuations in availability of the infrastructure facility. Later, it shows a slightly downward trend
movement in the index. States such as Odisha, Assam, Bihar,
Uttar Pradesh, Rajasthan, and West Bengal show almost a
static to downward trend in terms of infrastructure facilities
over time. The trends in these states move at a dismally low
level from the start and show little improvement. According to
the literature, this imply that the farmers in these states with
poorly developed infrastructural facilities do not get adequate

APMC Sub-indices: Trends according to the sub-indices


are as follows. For index on constitution of market and
market structure (Figure 2, Table 1 (p 42), column 3), best
performers are Maharashtra, Gujarat, Madhya Pradesh,
Karnataka, Rajasthan, Tamil Nadu and Assam. The mean
value of each of these states ranges above, or close to the
overall mean 0.49 of constitution of market and market structure. Worst performers are Odisha and Uttar Pradesh with
sub-index measure falling below 0.20. The remaining states
Andhra Pradesh, Bihar, Haryana, Punjab and West Bengal
perform moderately with the measure scoring between 0.23
and 0.42.
In the dimension of regulating sales and trading index
(Figure 3, Table 1, column 5), best performers are Maharashtra,
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SPECIAL ARTICLE
Figure 6: Scope of Regulated Markets Dimension of the APMC Index by State
Andhra Pradesh

Assam

Bihar

Gujarat

Andhra Pradesh

Assam

Bihar

Gujarat

Haryana

Karnataka

Madhya Pradesh

Maharashtra

Odisha
Orissa

Punjab

Rajasthan

Tamil Nadu

Uttar Pradesh

West Bengal

.5

.5

0
Haryana

Market scope

Figure 7: Alternative Market Channels Dimension of the APMC Index by State

Karnataka

Madhya Pradesh

Maharashtra

1
.5

.5

0
Orissa
Odisha

Punjab

Rajasthan

Tamil Nadu

1
.5

.5

0
1970 1980 1990 2000 2010 1970
Uttar Pradesh

1980 1990

1970 1980 1990 2000 20101970 1980 1990 2000 2010

2000 2010

West Bengal

1
.5

.5

0
1970 1980 1990 2000 2010 19701980 1990 2000 2010

1970 1980 1990 2000 20101970 1980 1990 2000 2010

Year

Year
Source: Authors calculations.

Source: Authors calculations.

provisions to incentivise farmers, improving the performance


of the agricultural sector. Notably, Assam, Bihar, Gujarat,
Haryana, Punjab, Odisha, Uttar Pradesh and West Bengal
do not provide specific set of regulations and score zero value
on dimension of pro-poor regulations of the APMC Act.
The remaining state Karnataka scores 0.051, which is very
low, yet indicates some level of pro-poor provisions in the
market as compared to the states that have no explicit propoor provisions.
In the dimension of scope of regulated markets (Figure 6,
Table 1, column 8), best performers are Andhra Pradesh,
Bihar, Gujarat, Haryana, Punjab, Karnataka,
Table 1: Statewise Summary Statistics (Mean and Std Dev) of the Sub-indices and APMC Index,
19702008
Maharashtra, Tamil Nadu and West Bengal.
1
2
3
4
5
6
7
8
The mean value of each of these states rangState
Composite Constitution of Channels of Regulating Sales Pro-poor Infrastructure
Scope of
APMC
Market and Market
Market
and Trading
Regulations
for Market
Regulated
es above or close to the overall mean of 0.77.
Index
Structure
Expansion
in Market
Functions
Markets
Punjabs mean score of 1 achieve optimum,
Andhra Pradesh
0.264
0.359
0.109
0.684
0.151
0.267
0.886
followed by 0.97 score of Haryana. The re(0.055)
(0.108)
(0.243)
(0.035)
(0.127)
(0.050)
(0.111)
search studies reveal that farmers on an avAssam
0.153
0.597
0.026
0.583
0
0.218
0.073
(0.069)
(0.244)
(0.092)
(0.226)
(0)
(0.082)
(0.219)
erage get 8% to 10% higher price and higher
Bihar
0.169
0.236
0.096
0.357
0
0.084
0.856
share in consumers rupee by selling the
(0.058)
(0.114)
(0.073)
(0.169)
(0)
(0.081)
(0.179)
produce in regulated markets compared to
Gujarat
0.223
0.668
0.039
0.257
0
0.219
0.857
rural, village and unregulated markets
(0.018)
(0.093)
(0.135)
(0.020)
(0)
(0.100)
(0.090)
(Acharya 2004). The trend in sub-index
Haryana
0.382
0.405
0.209
0.866
0
0.576
0.973
(0.087)
(0.145)
(0.137)
(0.114)
(0)
(0.069)
(0.019)
scope of regulated markets shows that most
Karnataka
0.319
0.780
0.034
0.673
0.051
0.135
0.871
of the states have started well and got better
(0.059)
(0.065)
(0.132)
(0.020)
(0.223)
(0.037)
(0.071)
over time. The worst performer is Assam
Madhya Pradesh
0.307
0.495
0.031
0.489
0.675
0.145
0.753
(0.073). Madhya Pradesh, Odisha, Raja(0.143)
(0.241)
(0.070)
(0.271)
(0.399)
(0.059)
(0.158)
sthan and Uttar Pradesh score moderately
Maharashtra
0.374
0.763
0.071
0.703
0.261
0.388
0.886
(0.086)
(0.165)
(0.225)
(0.044)
(0.273)
(0.077)
(0.070)
ranging between 0.62 and 0.75. States like
Odisha
0.120
0.192
0.022
0.493
0
0.082
0.625
Rajasthan, Tamil Nadu, Maharashtra and
(0.034)
(0.034)
(0.081)
(0.044)
(0)
(0.040)
(0.181)
Madhya Pradesh show downward trend in
Punjab
0.452
0.418
0.128
0.815
0
0.901
1.000
terms of proper spread-out markets in the
(0.053)
(0.052)
(0.139)
(0.141)
(0)
(0.098)
(0.002)
state. The shortage of markets in these
Rajasthan
0.381
0.723
0.056
0.710
0.769
0.130
0.744
states may mean poor market management,
(0.063)
(0.142)
(0.183)
(0.045)
(0.078)
(0.085)
(0.165)
higher traffic or congestion, poor service
Tamil Nadu
0.241
0.481
0.184
0.275
0.256
0.368
0.767
(0.098)
(0.388)
(0.250)
(0.283)
(0)
(0.082)
(0.157)
and low returns (Figure 6). The studies
Uttar Pradesh
0.153
0.172
0.015
0.421
0
0.193
0.745
show that the benefits received by the farm(0.038)
(0.150)
(0.033)
(0.205)
(0)
(0.087)
(0.222)
ers by sale of agricultural produce vary from
West Bengal
0.201
0.283
0.104
0.398
0
0.365
0.800
area to area because of the variation on
(0.066)
(0.194)
(0.070)
(0.269)
(0)
(0.104)
(0.262)
their spread over the states and availability
Total
0.267
0.469
0.080
0.552
0.154
0.291
0.774
of infrastructural facilities in the yards of
(0.122)
(0.268)
(0.158)
(0.251)
(0.289)
(0.229)
(0.265)
these regulated markets (Acharya 2004: 146).
Source: Authors calculations (Std Dev) in parenthesis.
price signals for adoption of new technology which may be a
reason for lower economic status of farmers in these states
(Acharya 2004: 127).
In the dimension of Pro-poor Regulations (Figure 5, p 41,
Table 1, column 6), best performers are Madhya Pradesh
(0.675) and Rajasthan (0.769). The mean value of each of
these states is well above the overall mean of 0.155 of pro-poor
regulations. Andhra Pradesh, Maharashtra, and Tamil Nadu
also score above the overall mean score. The enforced market
acts in these states provide special provisions to step up the
efforts to benefit producerfarmers, beyond other marketing

42

July 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

SPECIAL ARTICLE

In the dimension of Channels of Market Expansion (Figure 7,


p 42, Table 1, column 4), best performers are Andhra Pradesh,
Tamil Nadu, Haryana, Punjab and West Bengal. The mean
values of each of these states range well above the overall
mean 0.080 of channels of market expansion. Tamil Nadu
(0.18) and Haryana (0.20) are the leading states. These states
provide legislative reforms in the act and the corresponding
Rules that legally permit private agribusinesses, direct procurement and online trading in agricultural commodities, which
further drive the composite index a few points higher for
these states. Worst performers are Assam, Gujarat, Karnataka,
Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Uttar
Pradesh. The remaining state Bihar scores 0.096, which is
very low, yet above the mean score. It indicates alternative
Annex 3/Table 2: APMC Rankings, 19702008
Year

AP Assa Bih

Guj Har

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Rank change
1970 vs 2008

7
7
7
6
6
6
6
7
6
6
6
6
7
6
6
7
7
8
7
7
7
8
8
8
8
8
8
8
8
8
8
8
8
8
8
6
6
7
7

Kar

4
5
5
5
5
3
3
4
4
4
4
5
5
5
5
5
6
6
6
6
6
6
6
7
6
6
6
6
6
7
7
7
7
7
7
8
7
4
2

MP Maha Odi Pun Raj TN

UP WB

10
9
9
9
10
9
9
9
10
10
13
13
13
12
10
12
5
5
5
5
5
5
5
5
5
5
5
3
3
3
1
1
3
3
3
5
5
6
6

14
12
8
8
8
11
12
10
9
9
9
10
12
13
13
13
13
14
13
12
13
13
13
13
13
13
13
13
13
13
13
13
12
12
11
12
12
13
13

13
14
14
14
14
14
13
11
11
11
11
11
11
11
11
10
11
11
11
11
11
12
12
12
12
12
12
12
12
12
12
12
13
14
14
9
8
9
9

12
13
12
13
11
8
8
8
8
8
8
8
8
8
8
9
9
9
9
9
10
11
11
11
11
11
11
11
11
11
11
11
11
11
13
13
13
14
14

6
6
6
7
7
7
7
6
7
7
7
7
9
9
9
6
8
7
8
8
8
9
9
9
9
9
10
10
10
9
9
10
10
10
9
11
11
11
11

5
3
4
3
3
5
5
3
3
3
3
3
3
3
3
3
2
2
2
2
2
2
2
2
2
2
2
4
4
4
5
5
5
5
5
4
4
5
5

2
2
2
4
4
4
4
5
5
5
5
4
4
4
4
4
4
4
4
4
4
3
4
4
3
3
3
2
2
2
3
2
2
2
2
3
3
1
1

9
10
11
12
12
12
11
13
14
14
14
14
14
14
14
14
14
13
14
14
14
14
14
14
14
14
14
14
14
14
14
14
14
13
12
14
14
12
12

1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
3
1
1
1
1
1
2
4

3
4
3
2
2
2
2
1
2
2
2
2
2
2
2
2
3
3
3
3
3
4
3
3
4
4
4
5
5
5
4
4
4
4
4
2
2
3
3

0 +4

-2

-5

0 +2 +4 +1

-3

-3

8
11
10
11
9
10
10
12
12
12
10
12
10
10
12
11
12
12
12
13
12
7
7
6
7
7
7
7
7
6
6
6
6
6
6
7
9
8
8

11
8
13
10
13
13
14
14
13
13
12
9
6
7
7
8
10
10
10
10
9
10
10
10
10
10
9
9
9
10
10
9
9
9
10
10
10
10
10

0 +1 +1

* AP: Andhra Pradesh; Assa: Assam; Bih: Bihar; Guj: Gujarat; Har: Haryana; Kar: Karnataka;
MP: Madhya Pradesh; Maha: Maharashtra; Odi: Odisha; Pun: Punjab; Raj: Rajasthan; TN:
Tamil Nadu; UP: Uttar Pradesh;WB:West Bengal /(+) improvement/(-)decline/ (0) no change.
Economic & Political Weekly

EPW

July 9, 2016

vol lI no 28

provisions to expand marketing system through modern


channels in the state.
Bihar presents an exceptional case. The Chief Minister of
Bihar Nitish Kumar repealed the APMC Act in Bihar in 2006, a
first state ever to do so, to open agricultural trade and promote
growth in agricultural sector by inviting private business.
Graphical trends in Bihar do not appeal in terms of legislative
performance. There is considerable downward trend and
eventually a dip in movements of each of the sub-indices. The
deep dip post 2006 in Figure 7 is driven by repeal of the act altogether in Bihar. A recent study of Bihars post-reforms case
finds that abolishment of the APMC Act in the state has resulted
in vacuum in terms of some institutional body required to administer and promote the development of agricultural markets
in the state. In the absence of an institutional agency to manage the functioning of the markets, there is a continuous decline in the facilities provided by these markets in spite of the
availability of basic infrastructure in these markets. There is
an acute need to improve infrastructure in Bihars market
yards under the governments scheme for development/
strengthening of agricultural marketing infrastructure, grading and standardisation. The funds, however, under the government scheme cannot be used due to absence of an institutional body for the promotion of agricultural marketing in
Bihar (Government of India 2010; Intodia 2011).
Annex 3/Table 2 presents ranking of 14 states in terms of the
overall APMC index over time. As can be seen, most states show
a small positive upward movement in the APMC index. In terms
of rankings over time, not much fluctuation is witnessed. But it
is possible that some states have lost ground in terms of rankings and yet they register an increase in the magnitude of the
APMC index. Comparing the trend and movement of ranks in
the states over time, Maharashtra and Punjab appear to
witness stable and high ranking historically. The top gainers in
terms of ranking are Karnataka and Madhya Pradesh. The top
losers in terms of ranking are Gujarat, Bihar, and Odisha.
Gujarat and Bihar ranked at 6th and 12th position respectively
in 1970 but their ranks deteriorated to 11th and 14th position in
2008. Uttar Pradesh, West Bengal and Assam show relative
improvement in terms of magnitude of the APMC index but
continue to rank poorly. Haryana, Andhra Pradesh, Tamil
Nadu and Rajasthan maintained their higher ranks over most
of the time period.
Conclusions

This article offers a way to measure the state-led regulatory


institution aiming to improve post-harvest agricultural market
systems of 14 states of India in the period 19702008. The proposed APMC measures proxy the underlying regulatory agricultural marketing framework that are mirrored by de jure
legal and administrative norms together with the level of regulated infrastructure of agricultural produce markets that
might have implications for agricultural growth and poverty
reduction in these states.12
This exercise represents the first effort to systematically
characterise APMC Act & Rules across the states over time,
43

SPECIAL ARTICLE

without resorting to subjective surveys. Examining of the evolution of APMC index and its sub-indices across Indian states
suggests a few perspectives to understand agricultural growth
prospects and development.
First, APMC index over time shows an upward movement,
which implies strengthening of legal and administrative
framework of agricultural produce markets. Yet, much scope
for improvement remains in the states. APMC begins with a
very low score of 0.006 in 1970 and reaches up to 0.609 in
2008. There are wide differences in the APMC measures
across the states.
Second, rankings of states in terms of the APMC index show
varying time trends (Annex A/Table 2)stable and high ranks
for states like Maharashtra and Punjab, stable and low ranks
for states like Uttar Pradesh, West Bengal and Assam, rapidly
improving ranks for states like Karnataka and Madhya Pradesh,
while maintaining better ranks for Haryana, Andhra Pradesh,
Tamil Nadu and Rajasthan and swift deterioration in ranks for
states like Gujarat, Bihar, and Odisha.
Third, the case of Bihar emerges as an exception because
instead of the state showing response to strengthening the
governance institutions and legal framework, it chooses to
repeal the states APMC Act in 2006. In absence of the institutional agency to manage functioning of the markets, there is
continuous decline in the facilities provided by the agricultural markets. In this respect, Bihar lost scoring and ranking
in the APMC measure.

Fourth, much difference occurs in the APMC results when


information pertaining to infrastructure and pro-poor regulations are incorporated into the index.
Fifth, the magnitude and statewise ranking of the APMC
index post-2006 of most states, for example, Karnataka,

Andhra Pradesh, Rajasthan, Assam with others, witness sudden spiky growth in the index. It is mainly driven due to revamping of the state act on lines of the latest model APMC Act
2003. These are visible signs of efforts to reform institutions.
Despite the encouraging progress, more concerted efforts,
however, are needed to strengthen enforcement of the laws
and implementation of regulations.
Regulations in general are hard to measure (Bollen and
Paxton 1998) and thus, this first effort of measuring the APMC
Act & Rules in a comprehensive way is an important step forward to opening a debate. It overcomes the major constraint of
lack of adequate measurement of agricultural market regulations over time. However, with more data coverage especially
by use of qualitative information, the measurement could be
further improved. This article is an important contribution to
ongoing policy debates on agricultural reforms in India. It may
help to diffuse the fallacy or general pessimism about multifaceted regulations of the agricultural markets. Lack of policy
understanding about regulations being an important condition for economic development can severely undermine effort
to enhance economic growth in agriculture and poverty
reduction in nation states.

The Adivasi Question


Edited By

Indra Munshi
Depletion and destruction of forests have eroded the already fragile survival base of adivasis across the country,
displacing an alarmingly large number of adivasis to make way for development projects. Many have been forced to
migrate to other rural areas or cities in search of work, leading to systematic alienation.
This volume situates the issues concerning the adivasis in a historical context while discussing the challenges they
face today.
The introduction examines how the loss of land and livelihood began under the British administration, making the
adivasis dependent on the landlord-moneylender-trader nexus for their survival.
The articles, drawn from writings of almost four decades in EPW, discuss questions of community rights and ownership,
management of forests, the states rehabilitation policies, and the Forest Rights Act and its implications. It presents
diverse perspectives in the form of case studies specific to different regions and provides valuable analytical insights.

Authors:
Ramachandra Guha Sanjeeva Kumar Ashok K Upadhyaya E Selvarajan Nitya Rao B B Mohanty Brian Lobo K Balagopal Sohel Firdos
Pankaj Sekhsaria DN Judy Whitehead Sagari R Ramdas Neela Mukherjee Mathew Areeparampil Asmita Kabra Renu Modi M Gopinath
Reddy, K Anil Kumar, P Trinadha Rao, Oliver Springate-Baginski Indra Munshi Jyothis Sathyapalan Mahesh Rangarajan Madhav Gadgil
Dev Nathan, Govind Kelkar Emmanuel DSilva, B Nagnath Amita Baviskar

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July 9, 2016 vol lI no 28 EPW Economic & Political Weekly

SPECIAL ARTICLE

Notes
1 For longer article on the construction of the
APMC index and its sub-indices, see: (Purohit
2014) Measurement of Regulations: An Application to the Agricultural Produce Markets of
Indian States, IDPMs Development Economics and Public Policy Working Paper Series,
36/2014, University of Manchester, UK
2 In 2013, the Commission for Agricultural Costs
and Prices comes out with states ranking
based on degree of agricultural market friendliness, in which a reference to the APMC Act is
made (CACP 2013). The states ranking casts
doubt for number of reasons. Few are noted.
First, APMC Act is one peripheral parameter in
computing states ranking, when it deserves serious treatment for the sake of its more than 60
years of services to agricultural markets in India. Second, the exercise tends to undermine
the role of institutions (rule of law) in the efficient functioning of the agricultural markets.
Bihar is projected as the model state where the
state APMC Act is repealed and the states marketing system suffers due to institutional vacuum. Third, ranking is based on limited scope
and time dimension dealing with market for
wheat and paddy alone, than the entire state
agricultural marketing over the time. Fourth,
analysis seems to misrepresent the case of private sector participation in the agricultural
markets. The problem in most of the states of
India is not absence of private market, but that
of its correction for efficiency of the system as a
whole. According to Acharya (2004), the private trade handles around 80% of the total
marketed quantities of all agricultural commodities taken together. The marketed surplus
handled by cooperatives is estimated as 10%
and by public agencies 10%. And, fifth, the
exercise does little to understand how to safeguard and improve incentives of farmers in the
market who are central to both productivity
growth and commercialisation of agriculture.
This research attempts to take balanced
approach to issues.
3 There is a spectrum of definitions of regulation
ranging from broad to narrow in conceptual
scope, appeared at different times and there is
no accepted international definition of regulation. See Shaffer (1979) and Gardner (1979).
4 Traditionally, there is no agreement where and
how much the state should intervene in an
economy. At the same time, institutions must
have a dynamic feature since a good institutional arrangement may later become obstructive to growth in a different time and context
(Acemoglu 2003).
5 The model APMC Act & Rules, 2003 was introduced by the union government as a response
to address and overcome criticism of the existing regulated marketing system in the various
states of India. This research, thus, accepts the
model act as the baseline ideal act & rules.
The Act (2003) is taken to facilitate economic
outcomes with reference to how far they support or structure economic activities of the
agricultural markets by reducing uncertainly
and establishing a predictable stable structure
to peoples market-based interaction. A copy of
the model act and rules, as the baseline act,
can be found at http://agmarknet.nic.in/amrscheme/modelact.htm and Rules: http://agmarknet.nic.in/amrscheme/FinalDraftRules
2007.pdf.
6 The establishment of regulated markets in
India is evolved from the colonial statute on
regulation of agricultural marketing in 1897
when elements of regulation were first introduced in the cotton market under the British
Economic & Political Weekly

EPW

July 9, 2016

10

Raj. See Rajagopal (1993: 3134) for historical


account of evolution of the APMC Act in the
states of India, or read working paper series,
36/2014, IDPMs Development Economics and
Public Policy, University of Manchester, UK, for
detailed historical context.
Nevertheless, some states that have amended
their respective APMC Acts in accordance with
the new provision have not received encouraging response from private investors. Preliminary enquiry suggests that regulatory conditions are excessively stringent to attract private sector agribusinesses. Nonetheless, in
this paper, only information on the legal legislative measures allowing private players to establish agriculture markets is considered for
index coding.
Tetrachoric Principal Component Analysis
(PCA) is an alternative method of dimensionality reduction especially to treat binary variables (that is, a variable takes either 1 or 0, subject to existence of a legal provision or not)
(Kolenikov and Angeles 2009). Principal components are weighted sums of the standardised
variables. In the case of binary variarbles, the
standardisation uses results of tetrachoric correlations in place Pearson correlation coefficient between the underlying continuous variables using their discrete binary manifestations. The weight each variable gets in these
linear combinations is obtained by analysing
the correlation structure in the data. The first
principal component explains the largest
amount of variation in the data.
The interpretation of component weights
simply implies the relative contribution of
each variable in the index. The proportion of
explained variance by the FPC is 91% for
Scope of the Regulated Markets, 42% for
Constitution of Market and Market Structure,
72% Channels for Market Expansion, 60%
for Regulating Sales and Trading in Market,
76% for Pro-Poor Regulation and 44% for
Infrastructure for Market Functions. The estimated weights used to compute a state-specific
composite index are fi xed for the time-periods.
By determining same weights for each variable, it allows to capture aspects of critical
junctures or path dependency in the actual
level of market regulations over the time
across the states.
Using the score of the first principle component
(FPC) the sub-index is calculated using the following transformation. State X corresponds to
a state of interest, State Worst corresponds
with worst possible regulatory provisions and
State Best is a state with best possible regulatory provisions.
FPC (StateX)FPC(StateWorst)
Subindex (State X)=
FPC (StateBest)FPC(StateWorst)

11 The poor trend in APMC measure for the eastern states, especially Odisha, Assam and West
Bengal is consistent with findings of a recent
case study of agricultural marketing system in
some of these states, conducted by the National
Institute of Agricultural Marketing (NIAM),
Government of India.
12 Extension of this research tests the relationship
of variation in the measures of the APMC Act
with productivity yield and poverty incidence
separately. The results from the selected 14
states for nearly 40 years of empirical analysis
show that states with improved regulatory
arrangements in the agricultural markets
have significantly higher agricultural investment, yield productivity and fall in poverty.
The results are robust and yet to be published
by the author.

vol lI no 28

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Journal of Agricultural Economics, 61 (4),
73240.
Intodia, Vijay (2011): Investment in Agricultural
Marketing and Market InfrastructureA Case
Study of Bihar, Research Report, National
Institute of Agricultural Marketing (NIAM),
Jaipur.
Kolenikov, Stanislav and Gustavo Angeles (2009):
Socioeconomic Status Measurement with Discrete Proxy Variables: Is Principal Component
Analysis a Reliable Answer?, Review of Income
and Wealth, 55(1), 12865.
Minten, Bart, Anneleen Vandeplas and Johan
Swinnen (2012): Regulations, Brokers, and Interlinkages: The Institutional Organization of
Wholesale Markets in India, Journal of Development Studies, 48(7), 86486.
Rajagopal (1993): Indian Rural Marketing (Jaipur:
Rawat Publications).
Shaffer, James D (1979): Observations on the
Political Economics of Regulations, American
Journal of Agricultural Economics, 61(4),
72131.

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Rethinking Economics, Statistical System


and Welfare
A Critique with India as a Case
R B Barman

The paper picks up what can be called as a thread of


discontentment in conventional macroeconomics
through a brief review of literature, carefully chosen to
bring home the importance of micro, to justify that it can
give a realistic framework of analysis of the economy. To
support research for validation of alternative theories
challenging the rational approach, deeply rooted in the
general equilibrium theory, we need empirical evidence
linking the micro with the macro. The idea is to seek
conformance of these theories based on ground realities
and to consider institutions and governance as
important components of this analysis. The existing
statistical system in India needs to be reoriented
following the System of National Accounts 2008 on
microdata to capture distributional characteristics of
macroaggregates. There is a new direction in applied
econometrics based on the idea of stochastic
equilibrium which is testable using microdata. The
paper touches upon this idea citing a single work.

R B Barman (barmanrb@gmail.com) is Chairman of National Statistical


Commission. He was President of the Indian Econometric Society and
Executive Director of the Reserve Bank of India.

46

Statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write.
H G Wells
Economics is at a crucial juncture. The research program that has
guided economic theory for some six decades is at an impasse, and
a new and different research programme is emerging. The new
programme grows out of a different vision of the economic process.
This vision suggests a very different type of economic theory offering a different explanation of how the economy works and different
policy advice.
Meir Kohn

Balancing between Theory and Empiricism

he field of macroeconomics was dominated by Keynesian ideas till 1970s. Since then, the perceived conventional wisdom has been challenged by a number of competing schools of thoughts. Especially in the post-2008 crisis,
the relative ineffectiveness of policy initiatives in the stabilisation of economy has made the voice of dissent much louder.
We are now on the cusp of a paradigm shift in our thinking of
the next phase of theorisation. The main objective of this short
paper is to review a few critical strands of arguments that persuade research for a fresh look on analytical framework in the
present context and the statistics needed for empirical support
of the same.
The official statistical system is a very important part of
institutional framework of a country. At this juncture, this
system needs a major paradigm shift for a much-improved
insight on socio-economic changes taking place at a faster
pace through various transformations. The measurements
of variables generally conform to international standards for
comparability, but their consistency remains a problem, area
because of practical issues of measurement (for instance,
the banking services price index) and decentralisation without effective coordination. There is a stress on microdata-bases
fully compatible with macroeconomic accounts (SNA 2008) for
a comprehensive view of an economy. In this effort, we need to
take advantage of the revolution in information technology
(IT)-based systems, capturing data at transaction levels and
then using them for modelling greater insight on dynamic
forces operating. This is also used in propelling fundamental
changes, identifying factors which are more effective for inclusive growth, the causes for failure to gain full demographic
dividend, deeper insight on transmission channels, structural
transformation and so on.
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These two premises set the contours of the paper. It has to


be a balancing act between theory and its empirical basis. This
paper will try to cover these two aspects to the extent possible,
keeping in view that clarity and brevity should go together.
This is followed by a fresh look on empirical foundation of
economic analysis. The next question is the importance of
microstructure in such analysis. This paper will also briefly
touch upon certain issues on inclusive growth and governance
having bearing on information systems, which is followed
by a section devoted to a few major issues on implementation. The concluding section highlights the thoughts which
inspired this work.
Hide and Seek of Data

Macroeconomics dominates the field of economics. There are


excellent reviews of different schools of economics competing
with ideas to establish their superiority, as any standard book
on macroeconomics will tell us (Carlin and Soskice 2006). The
ideas advanced by these schools are still unsettled. As an applied econometrician and statistician, I have started work with
a different interest mainly arising out of forecastability of business cycles. As will be shown, it is extremely difficult to give
reasonably precise forecast for period beyond short-term. The
period of one year or so does not cover the business cycle in
full, which creates a basic and fundamental problem in theorisation. The validation of theory empirically may work within
the sample period, but if it is not enough to forecast a business
cycle or allow for anticipated policy-induced changes, then
how do we know if the policy works? We talk of deep parameters to be unearthed from microdata as an option. There are
other issues on failure of policy prescriptions taking an economy out of recession. In other words, as a result of dissatisfaction with present state of macroeconomics (Quiggin 2010),
new ideas are emerging. There is a strong feeling that the
empirical foundation of economicsbased on micromacro
linkage-encompassing agents of change expresslycannot be
put off any more for explaining reality. The support for this
paradigm shift is growing. In addition to what we quoted
above (Kohn 2004), we need great advocates of change to
justify the case against the deep-rooted, conventional framework of economic analysis, on several grounds. We start with
the following:
In our view, economic theory should be derived not from the minimal
deviations from the system of Adam Smith but rather from the deviations that actually do occur and can be observed.
Akerlof and Shiller (2009: 45).

The subject of macroeconomics had a heyday during the


Keynesian period because it was considered state-of-the-art to
solve challenges of the economy facing demandsupply imbalances, through interventionist government policy. The key
determinants of economic growth rested with private and government consumption, investment, employment and external
balance. The government could intervene to offset imbalances
in any or all of these components. This was a major deviation
from the unfettered play of free market as a basis of economic
theory. The financial market was expected to equilibrate based
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on fundamentals, liquidity and rate variables such as interest


rate and exchange rate. The process set by accelerators and
multipliers were based on aggregates because, in Keynes
view, the analysis of individual components suffered from the
fallacy of composition. Keynes might have thought differently
had he been in our midst now as there is huge data available
on individuals in coded form, maintaining identity for mapping and analysis for almost all agents. All pervasive use of IT
for business and governance at transactional level enabled the
capturing of microdata and their manipulation for extracting
information, covering both forest and trees, as the adage
goes, looking for coherence and behavioural explanations
for generalisation.
The logic that dominated the theorisation in macroeconomics is being challenged for the past 40 years or so. There have
been new schools of thought, but the basic premise set in
trend-cycle explanation of business cycles continued in one
form or another as outcome of rational individual behaviour,
though logical basis of different schools of thought propounding new theories, differed. The transmission channels of such
policies affecting micro units are hazy as well. Governance
and institutions are vital parts of actual implementations, but
are not parts of the analytical constructs in general. If the
nations in the developing world have not been able to benefit
from their advantages, one has to look for the major causes
holding them back (Achemoglu and Robinson 2012). This
aspect is not adequately captured in macro models explaining
business cycle. A sizeable group of current crop of researchers,
technically expert in extracting useful information out of large
data set, makes a difference in business setting. It is felt that
with such attempts alternative theorisation out of microdata
is possible. Till then the discontent on the conventional framework of analysis failing to guide policy formulation the way it
should, will continue to get loud and louder.
Different Macro Models

We know that the total or average per capita gross domestic


product (GDP), including sectoral break-ups, does not truly reflect much due to highly skewed income distribution, which is
heterogeneous over time and space. There are variations in
agent preferences, skills, capital accumulation and use and
factor endowments which contribute to heterogeneity. Cultural diversity also impacts agent response and environment for
production. In short, in a country of Indias size there are
many complexities which are relevant for deeper insight on
how the economy responds to causal factors and inducements.
As the ultimate beneficiaries of progress are expected to be
people across all sections, it is necessary to know how benefits
of growth accrue. A cardinal principle of economics is the
search for laws governing the creation and distribution of
social wealth.
Aggregates often conceal much more than what is revealed.
For example, a change in interest rate to contain inflation does
not spell out the differential rates at which various segments
of the economy get affected. In such a case, how do we relate
macro with micro, knowing that distributional dynamics
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cannot be wished away? There are other issues for a resource


constrained economy (Dasgupta 1987). If we relate macro with
the ideal micro entity assumed as symmetric distribution, it
can possibly be considered as a travesty. Walrasian general
equilibrium explaining the economy may be elegant; likewise,
the General Equilibrium Theory of Arrow and Debreu is
mathematically rigorous. However, their theorisation that if
competitive market exists for each and every commodity in
every possible time and space, and under every possible contingency, the resulting allocation of competitive resources
could not be improved on for everyone, holds only when the
conditions are satisfied. How realistic are these assumptions in
actual practice? Blaug (2002) observed that it is this paper
that makes the beginning of what has since become a cancerous growth in the very centre of microeconomics.
Government intervention is all pervasive in modern economy to correct for imbalances of market economy. How does
this intervention result in market equilibrium? And, how does
pursuance of government regulations conform to or violate the
General Equilibrium Theory (Delorme 2001: 17)? The theory
firmly entranced in rational behaviour is logically sound, but
ground realities are different. If the economy is in disequilibrium, as is often observed in the commodity market,
the labour market and the financial market, we need to understand why and how, these are actionable. In fact, the
labour market is perpetually in disequilibrium as the high
disguised unemployment figures will bear out. Minimum support price for commodities, minimum wages, interest rate subventions are clear signals of violation of equilibrium considered so sacrosanct.
The quantity theory of money provides an important basis
for monetary targeting, like a goalpost for a central bank,
based on a calibrated approach for control of inflation. As per
this theory, the product of the quantity of money (M) and its
velocity (V) equals the product of the price level (P) and expenditure on goods and services in the economy (Q). If we use this
identity to reframe it into a behavioural equation, a so-called
inverse demand for money function, to set a target for price
through intervention on money supply, as we have been doing
for a long time following Chakravarty Committee Report
(1985), we impose strong assumptions on other variables. We
now depend more on rate variables, such as interest rate and
exchange rate, than earlier for monetary policy. Inflation targeting includes a fan chart giving a band based on standard
error and confidence levels incorporating stochastic elements
of models. How effective are the policies initiated for containing inflation and with what time lag? This is a moot question,
though different macro models based on alternative theorisation will give different estimates.
Parameters for Stabilisation

The monetary policy assumes an efficient transmission channel to operate smoothly. If we analyse the impact of monetary
policy on corporates, small firms and households, or urban
and rural financial markets, we will find that the reality is different. Thus the present framework which assumes symmetry
48

in its transmission across agents, space and time through an


efficient market, is far-fetched. The rational expectations theory for market efficiency assumes not only efficient information
system but also fully informed agents operating in the market.
They should get money for productive activity at market clearing rate. If the market is not efficient, we suggest alternatives
like financial inclusion under various schemes. We expect people to be financially literate. Financial literacy is one thing, but
the peoples wide participation in financial market as rational
being, both on demand and supply sides, is a different game.
We need an efficient rural financial market, at least in limited sense, which moves along the main financial market concentrated in Mumbai. We should have at a minimum the
demand and supply of money in rural financial marketnot
easy to defineequilibrating at a price not very different from
the rate prevailing in urban market assumed to be tightly coupled with main market. The difference should be justified by
additional risk, if any, and costs of operation in a transparent
manner. If the absence of market players holds up efficiency,
we need to find ways to correct it.
The problems we have mentioned are well known, but these
are not actionable because of the infirmities in the existing
financial market. We do not have professionally collated information at reasonable time intervals to guide us on the nature
of variation, what works under what circumstances and how
to make them part of the efficient market economy, if possible.
The end result is that the hands available for work at a rate of
return higher than the market rate, remains idle in violation
of what the theory based on market equilibrium envisages.
Social business suggested by Muhammad Yunus (2007) is a
possible solution.
Let us revert to business cycle analysis under which the change
in real GDP over time is explained broadly by trend and cycle.
Trend is basically related to the growth theory, and cycle is related
to the stabilisation policy options. In pursuing monetary policy
we try to focus on stabilisation policy options for dampening
risky up-turns and down-turns. The steady upward trend in
growth is generally considered as good effect of this stabilisation option. The supply response is considered more as a
response of price signal and stimulus provided by the government through fiscal policies which influence private initiative
on saving and investment than direct effect of monetary policy
as such. All these things together lead to growth, with production function explaining it, with capital and labour as key
variables. Of course, the principles of economic growth cover
many more aspects (Gylfason 1999). Macro-econometric models are generally simplifications of reality, specified to test
theory empirically, usually keeping in view the specific purpose of analysis.
Macro-econometric models (Bhattacharya et al 1994) as an
illustration of stabilisation policy options) built for policy formulation and simulation generally rely on fiscal and monetary
policy for growth and stabilisation. The issue of distribution of
income is wished away, often through advocacy of trickle-down
theory. This theory, unfortunately, glosses over overwhelming
empirical evidence that a large part of income in fact trickles up
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rather than down (Adelman 1975; Piketty 2014). The end result is
the large rise in inequality (Sachs 2011). India is no exception.
There are other issues on stabilisation policy options using
macro models. The estimated parameters remain stable for a
short period and hence simulations work well in this narrow
time window. The time-inconsistencies problem, using these
macroeconomic systems, are highlighted in the literature. The
so-called deep parameters of the Lucas (1976) critique inspired research on inter-temporarily optimised models independent from specific policy regimes. As he suggested, the parameter may possibly be lying somewhere deep inside the mountains of microdata, called microeconomic structure of models.
As Akerlof and Shiller (2009) observed, We need to look at
how people actually behave, and how this behaviour contributes to the performance of the economy as a whole. The emphasis on actual needs to be noted carefully. The aggregates
are simplistic summary of actual microdata, void of distributional characteristics. As a theory, consumption and investment functions may be derived from the rationally-expected
optimising behaviour of households and firms. We understand
utility function for individuals for behavioural analysis. But
how does one derive it from empirical analysis of macro aggregates; moreover, how do we conceive the idea of marginal utility
from data on aggregate consumption? We need to examine behavioural foundation of macroeconomics based on actual micro behaviour revealed in data for it to be realistic.
Rethinking on Macroeconomics

Time series econometrics exploded in the last four decades


and it is continuing. There is a seminal work of Nelson and
Plosser (1982) explaining GDP(Y) based on the random walk
model, usual symbolisation apply, that is:
Yt = Yt-1+t .
Now if we go on replacing Yt-1 by Yt-2, Yt-3 and so forth what we
will ultimately be left with is that Yt is explained by a constant
term raised to a power n and Y0 plus et. This summation
et is nothing but the sum of random shocks moving the
growth process, the so-called permanent shock. First of all,
the model is based on an assumption that the growth process
can be explained by such a simple model. Now there are statistical and econometric tests to justify this model. We can raise
serious question about the validity of such a model. However,
knowing that a satisfactory approximation of business cycle
through use of causal models has remained largely unsatisfactory, one tends to look beyond conventional macroeconomic
theorisation for explaining GDP growth process to expose possible weaknesses in such approach. But how do we digest the
idea that the economy grows by random shocks? Where do
these random shocks come from? As economists, our focus is
to extract information out of the so-called random forces to
unearth possible regularities hidden therein. One possible explanation advanced is that innovation and technology may be
a source of random shocks; a host of other factors such as
exceptional skill levels also bring about random shocks. This
random shock is permanent with no tendency for output to
revert to its former trend, following a shock. Challenging the
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conventional wisdom on trend cycle analysis, Nelson and


Plosser (1982) observed that what looks like output fluctuating
around a smooth trend is in fact fluctuation in the trend itself,
due to a series of permanent shocks with this permanent productivity shocks determining a new growth path. Whereas,
following Robert Solows seminal work where economists
have traditionally separated the analysis of growth from that
of fluctuations, the work of Nelson and Plosser posed a serious
challenge in its validity.
The Real Business Cycle model is advanced on the consideration that these permanent components are arising from supply shocks. As suggested by the proponents of this theory, real
shocks are mainly due to productivity changes brought about
by technology; money has little impact. The Dynamic Stochastic General Equilibrium Model is an econometric framework
based in micro foundations on decisions by individual households, firms and government operating with rational expectations. Effectively it attempts to capture optimal decisions of a
few representative agents. Empirical validity of the model is
arrived at by calibration. It suggests that the economy should
be modelled using this theory. Though theoretically elegant,
its support through the empirical validation process continues.
In business cycle analysis, looking for leading indicator, we
must be able to estimate trend and cycle components; what is
the peak, what is the trough, what is the amplitude, and above
all, the regularity thereafter. As Diebold and Rudebusch
(1999) observed,
Understanding the difference between the economys trend and its
cycle is crucial for business cycle analsis. A long debate has raged on the
appropriate separation of trend and cycle In the end a great deal of
uncertainty remains; however, it appears to us that some traditional
trend/cycle decompositions with quite steady trend growth are not
bad approximations in practice.

This observation appears to be a grudging acceptance of conventional approach of decomposition of fluctuations in GDP.
This paper has presented a reasonable idea about limitations of macroeconomics and the macro-econometric models.
It is time to come to a conclusion. Let me highlight what some
leading economists think about the current state of macroeconomics. The intellectual disarray was complete. No shared
ideas about what is going on, why and what could be done
about our ailing economy. Disputes in economics today are
like those in medieval theology with different schools anathematising each other but with no obvious indicator of who is
right and who is wrong, noted Lester Thurow (1982). Ronald
Coase (1993) called economics blackboard economics saying, what is studied is a system which lives in the minds of
economists but not on earth. Paul Krugman (2009) (as quoted
in Andrew Sheng et al 2012) went even further saying, Macroeconomics over last three decades has been useless at best and
harmful at worst. Economists became blind to catastrophic
macro failures because they mistook the beauty of reasoning
of theoretical model for truth. I hardly need mention that this
severe criticism poses a challenge on us as economists. If we
have to look for an alternative which models random behaviour
of individuals, stochastic process is a possibility, as below.
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Misleading Analysis
Questioning the validity of the fundamental idea of neoclassical equilibrium theory based on flexibility of prices, Aoki and
Yoshikawa (2007) observed that it is misleading and wrong to
analyse such problems as business cycles, unemployment, and
deflation, assuming neoclassical equilibrium theory. This
theory does not hold when there are a large number of agents
of heterogeneous type. Microeconomic behaviour is fundamentally stochastic. In their analysis, an important finding is
that the ultimate factor-generating economic growth is demand creating technical progress. They suggested the new
literature of combinatorial stochastic processes, to restructure
macroeconometric models. We need to pursue this idea in our
research in lines suggested in their work.
In short, starting with Keynesian framework of macroeconometric models we had many ways of theorisation and
empirical support for explaining economic fluctuations (Favero
2001), for an excellent review of applied econometrics and
Fullbrook (2004), for a guided tour on failure of mainstream
economics. Jan Tinbergen initiated macroeconometric modelling and Klein (1983) lifted it to a great height. Sims (1980)
gave a new direction which continues, with sophistications of
cointegration, but with economic logic to avoid mindless empiricism. Macroeconometric modelling may be rich and elegant, but we increasingly realise that this is not enough. We
need to delve much deeper to understand how the efforts of
individuals give rise to overall changes, and how the fruits of
economic development get distributed among its people, in the
so-called welfare aspect of the economy. The theory should
build on the micro realities as reflected in the granular data.
Econometric techniques are now much more sophisticated,
thanks to panel data models (Baltagi 2001), stochastic processes indexed by various dimensions, and other powerful statistical tools of multivariate analysis. Tools used for artificial intelligence based on machine learning, such as neural network,
genetic algorithm and self-organising maps are some of the
others which are capable of processing high-frequency data to
extract useful information. With this capability it looks that
we are set for a new phase of theorisation, validated by empirical tests. There are major issues on heterogeneity and autocorrelation, apart from specification issues, which will beset empirical exercises. Unobserved heterogeneity arising out of differences in culture, religion or preferences are factors which
have to be considered in some way. The author believes that
these challenges will test the ingenuity of researchers, and
new ways of dealing with them will emerge. There are enough
of success stories with microdata. The new generation of business analysts are already using high frequency data to support
corporate goals. We need a similar crop for public policy goals.
Importance of Microstructure

Along with attainment of overall growth, the policy framework of any welfare state tries to empower people at the bottom of the pyramid to raise their level of income and overall
welfare of the society. Therefore, inclusive growth as a key
strategy for economic growth is of paramount importance and
50

should be carefully factored in all policy initiatives truly. For


this, we have to appreciate development microeconomics
(Bardhan and Christopher 1999) setting out imperfections due
to different kinds of household economics, fragmented market,
technology and the like. The market economy has many advantages, and it is on an autopilot mode subject to regulatory
constraints. But when it comes to the welfare of the poor, government intervention plays a crucial role in the redistribution
of income. Rawlss (1971) difference principle states that a just
society should maximise the welfare of the worst-off group.
Amartya Sen (2009) has gone very deep, both in theory and
measurement, on the question of poverty, inequality and entitlement. The government has been very active in directing
policy for uplifting the poor. Poverty alleviation programmes
such as the Mahatma Gandhi National Rural Employment
Guarantee Act and Pradhan Mantri Jan Dhan Yojana are two
classic examples of policy initiatives on inclusive growth.
These are commendable efforts for directing fruits of growth
for economic welfare. The most important asset of the poor is
their own labour. However, this remains underused for want
of market demand, which is most acute for agriculture labour.
The incidence of poverty is highest among landless labour.
We try to evaluate the success of anti-poverty programmes
using data collected by National Sample Survey Office under
consumer expenditure surveys. In the recent period, two highpowered committees (Tendulkar et al 2009; Rangarajan 2014)
looked into estimates of poverty ratio and validity of poverty
line. There has been a heated debate in professional circles
about suitability or otherwise of these estimates. In my view
this is again an attempt to represent a cut-off level in the lower
tail of consumptiondistribution based on externally-set norm
on poverty by a single-line index. We need to look at the structure of the entire distribution and draw insight from learning
on what works and what does not work to eliminate poverty
once for all. We need to understand how the top 10% are doing, how the bottom 10% are doing, how the next 10% are doing, and how the next. The threshold provided by the poverty
line serves only a limited purpose. Unfortunately, we get lost
in a big way in the average and aggregate and in case of poverty line it becomes a passion. To reiterate, we should thoroughly dissect the distribution to understand what helps and
what does not work, what we need to do in terms of policy intervention to make things better following success stories and
avoiding pitfalls based on evidence-based learning. This is the
fundamental question this paper attempts to bring into the
forefront in its analysis.
Ingenuous Statistical Science

The major impulse for growth originates from large enterprises as investments made by them impact the economy in a big
way. The quality and sophistication required for international
competitiveness on high value goods and services arise out of
this sector. We have high quality data through their audited
accounts and disclosures to understand how they operate,
raise productivity and competitiveness, save and invest. What
we now need is to create infrastructure to integrate them
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taking advantage of IT for their insight and analysis. We can


also tag in information on financial assets, liabilities and capital flows for analysis of risks and returns, to discover dependencies on external sources of funds, technology and know-how
in their journey for providing the muscle needed for promoting and sustaining high-growth economy. Our policy on Make
in India is highly commendable; however, we will need credible data to evaluate the progress, as we will to intervene or
strengthen the grand design.
The accounting information available in the annual accounts
of business entities should be considered for the needs of national
statistical system at least in distributional sense, to start with,
for a better insight on the economy. The data has to be harmonised as per concepts and definitions prescribed under SNA for
measurement, aggregation and international comparability.
The government is a major sector contributing to the national
income. But the government is a huge organisation and support
system to the government requires a layered structure so that
allocations under different heads of government accounts are easily accessible with sufficient details for analysis and evaluation.
The government sector is almost fully computerised which
is amenable for capturing highly disaggregated data in digital
form. The Rangarajan Committee (2001) recommended consolidation of these data using data warehousing (DW) technology. It should be our priority to fully implement this recommendation for the statistical system we are talking about.
In brief, of the households, corporates and government sectors classified as institutional groups under SNA, covering almost
all of the GDPonly for household sector, which covers mixed
incomemicro level data are difficult to gather. We rely on
sample surveys to estimate various parameters for this sector.
We treat households as residuals for estimation of savings. We
have reliable microdata on landownership, agriculture production through remote sensing, as example, to fall back on
for this sector. The ingenuity of statistical science may help in
the specification and estimation of models using these kinds of
data required for distributional characteristics to be used for
inferences. For obtaining reliable estimates relating to agriculture, a vital part of our economy feeding large population, all
relevant data, including at farm level, needs to be computerised at the earliest.
Importance of Institutions and Governance

Institutions and governance figure prominently as important


determinants of growth. Institutions facilitate transactions according to the discipline of rules and regulations, making
economy less risky and more predictable. The government intervenes in the market to correct for imperfections, to promote
competition for creative destruction and in the adoption of
new technology. These two are therefore important determinants of any economy (Coase 1993; North 1990). We need to
include them in models specified for analysing the economic
system for being more realistic as a tool for policy.
In a developing country it becomes incumbent upon the government to set certain priorities for intervention in the market
for empowering the poor to reap the benefits of growth and
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increase social welfare. As the controlled regime did not yield


desired results to the extent envisaged, we had a regime of
major institutional changes starting with liberalisation of
Indian economy since 1992. This led to a new phase of
high growth and saving. However, as the service sector led the
way, absorption of surplus labour was slow and inequality
increased. This has happened due to shifting of earnings from
labour to capital income. In other words, benefits of growth
did not percolate down for reduction of poverty expected of a
high growth regime. Perhaps this is a paradox of our economic
policy that we have High Saving Rate and High Poverty
Ratio coexisting in India. This narrates the inadequacy of
high dependence on mere aggregates. To offset this imbalance
in the sharing of benefits of high growth, the government
launched a programme of employment generation for the poor.
To make these programmes more productive the new National
Democratic Alliance government, which came to power in
2014, shifted emphasis beyond simple expenditure to gainful
activity. It has to be seen, how this change in institutional arrangement makes a significant difference.
It is rules and regulations and their administration that
define our life in every sphere. How do we assess their impact
on the economy? Reviewing the Theory of Regulation as
Macroeconomics with Institutions, Robert Delorme (2001)
observed that,
The sophistication of modelling and of economic methods goes along
with often ad hoc and unsatisfactory assumptions about the institutional context of existing economies. Macroeconomic theory suffers
from a deficient analysis of the impact of institutions upon individual
behaviour and of the macro regularities that result from them (p 10).

The message is that we must find a way to incorporate the


institution as an important component of our analytical framework and measure them using empirical evidence.
The five institutional forms suggested for analysis are:
(i) money and credit relationship; (ii) wage labour nexus;
(iii) forms of competition; (iv) configuration of the state; and
(v) relationship of the economy with external world (Midttun
and Svindland 2001). We have a classic example of how
institution made a highly impactful difference in case of
Singapore (Yew 2000).
William Baumol (1990) observed that,
The performance of economies over time is determined by pathdependent responses of individual entrepreneurs and organisations
to the changing incentive-structure generated by the evolving institutional matrix consisting of mutually-interacting formal and informal
rules of the game in the social, political, and economic domains.

The emphasis on path dependence is critical. The subject of


statistics, both theory and empirics, is built on the basic premise of distributional characteristics approximated by models
and parameters estimated to represent them. When these are
indexed by time and space as stochastic process, we have a
way of capturing path dependence.
We need appropriate data going into analysis of the role of
institutions and governance. Economists have repeatedly found
that the better the rule of law, the richer the nation. Kaufman
and Kraay (2008) (refer World Bank for a series of articles by
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them) report that in the long run, a countrys income per head
rises by roughly 300% if it improves its governance by one
standard deviation. Governance is measured by voice and accountability, political instability and violence, government
effectiveness, regulatory burden, rule of law, and control of
corruption. How do we measure them, what are the multivariate factors we take, how do we quantify them and how are
these linked into the framework of analysis, are the critical
concerns for data collection and aggregation. The quoted estimates are therefore required to be reworked, sorting out which
items of data to be collected, how determinants are to be
measured and how sensitive data needs to be obtained. A suitable method based on research may suggest approach for empirical verification for their validation.
In India, each state has certain advantages arising out of
community bondage. Gujarat was in the forefront of dairy
development as successful example of cooperative movement.
The North East has a rich heritage of colourful designs in the
production of traditional handloom textiles. The former gainfully absorbed large numbers of people as part of a very successful enterprise while the latter is still struggling in spite of
continued government support. Of course, there are differences within the North East itself. Tripura, Sikkim and even
Mizoram have done better than the rest. What stimulates people into gainful activities where they have certain natural
advantages and more responsive governance, in spite of
some other handicaps? Special dispensation on funding for
these states did not work that well. These two regions located in two extreme ends of India are just examples of institutional settings in which dynamics of socio-economic development unfolds. It is necessary to measure socio-economic
dynamics in their environmental and cultural settings to study
the institutional influence on development (Acemoglu and
Robinson 2012).
Implementation with SNA 2008 as Guide

In the official statistics of a country, the GDP and its components are compiled following SNA as prescribed by the United
Nations (UN) through its Statistics Department, in coordination with leading institutions like the International Monetary
Fund (IMF), the World Bank, the Organization for Economic
Co-operation and Development (OECD) and the Commission of
the European Communities. Now India follows the SNA 2008
for our GDP estimates. The SNA classification of national accounts is aimed at providing a comprehensive view of an economy and reinforcing the central role of national accounts in
statistics (SNA 2008: xxxiii). The use of microdata for macroeconomic accounting is covered in para 1.59 of the report (p 9).
To quote:
There would be considerable analytical advantages in having microdatabases that are fully compatible with the corresponding data for
individual units. There would be considerable analytical advantages
in having micro-databases that are fully compatible with the corresponding macroeconomic accounts for sectors or the total economy.
Data in the form of aggregates, or averages, often conceal a great deal
of useful information about changes occurring within the populations
to which they relate.

52

In regard to implementation, it mentions major challenges in


the collection and harmonisation of data conforming to standard set for international comparability on measurements.
The SNA embodies the need of the official statistical system
of a country for informed decision based on evaluation of policy and performance on economic growth. The data relate to
sectoral distribution of production, human resources and investments in their institutional contexts. The context is basically the pressure of demand and supply in the market economy, competition and efficiency for internal and external balance within manageable risk appetite.
As envisaged, we need microdata for greater insight. Keeping this in view, we have to make a beginning as per priorities
set in SNA. In this context, corporate and government sectors
are the best bet as these data are now captured routinely using
IT. Even for other sectors, as a result of the all-pervasive use of
IT, business transactions get captured in digital files. With the
increasing use of e-payment through credit card, debit card,
ATMs and mobile phone, we have a huge chunk of transactionlevel data which can be related with other information on
household and business characteristics captured elsewhere.
We also get account-level information on how much is given as
loan, how much is deposited, what is the interest rate, what
social group the account holder belongs and so on. Similarly,
we get data on business units of unincorporated entities from
the books of accounts to be filed with their banks. These are
amenable for classification under small sector and tiny sector
under different industry, as well as different size groups. Basic
Statistical Returns (BSR) prescribed by Reserve Bank of India
(RBI) is a systematic approach to collection of banking data.
We need to consolidate them under the superstructure of
financial accounting or flow of funds, as defined in the UN
Statistical System.
We undertake sample surveys to collect unit-level data on
value of production, value addition, compensation to labour,
profitability, inventory, capital accumulation and so on. These
data can be related through the mapping of unique identity of
the respondents. Aadhaar can be a very useful handle for
household sector data in the future, and it can be collected
from respondents as part of their identity. For business establishments, we have different system of identification. These
identities have to be mapped to uniquely identify them for the
statistical system. Secrecy of collected data can be maintained
as promised under the Collection of Statistics Act.
Corporate sector data are required to be mandatorily filed
with the Registrar of Companies, Ministry of Corporate Affairs
(MCA), in prescribed digital format under MCA 21. There are
over 30,000 public limited companies for which data for 201415
were available with them. On coverage, in terms of paid-up
capital, these companies may constitute about two-thirds of
the total. In addition, there are over two lakh private limited
companies filing data regularly. Together, these data accounted for 85% of paid-up capital of non-financial corporate sector
going into GDP estimate in 201415. The accounting data of
large size companies need to conform to Indian standard consistent with the International Financial Reporting Standards
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(IFRS). As a result, data for these companies are homogeneous


for comparability and aggregation. The extensible Business
Reporting Language (XBRL)-based online reporting system
ensures easy access of these data for collation. Securities and
Exchange Board of India (SEBI) and stock exchanges collect
certain data on listed companies on a regular basis. This
includes quarterly results of these companies. We have to
structure these data into an integrated system.
We can think of a pilot project based on collected corporate
sector data to develop an intelligent system with a wealth of
information on their performance which can be used to estimate value of output, value added, saving, investment, compensation to employees and more for national accounts; and
flow of funds for financial accounting. This presumes that we
develop concepts and definitions which are amenable to the
requirements of SNA and financial accounting. The data
required for a regulatory system flows to concerned agencies
responsible for compliance. Involving them as part of standing
committee for maintaining the repository will help in better
coverage and timeliness of reported data.
Government revenue and expenditure data are parts of IT
systems maintained by concerned departments. We can use
these data not only for national accounting, but also for other
purposes like MIS for concerned ministries and operating
arms. At this stage we have problems in getting these data,
particularly for local bodies. Also, these data are scattered in
various systems, for instance, the Central Accounting Reporting System, Nagpur, the Accountant Generals office and so on.
A systematic way of consolidating these data at the Ministry of
Finance through possibly a distributed system following the
existing structure of allocation of work will go a long way in
creating a rich repository of government revenue and expenditure with related characteristics required for analysis.
If we want to focus on health factors to study the extent of
undernutrition causing poor health, the role of education and
training for the quality of human resources, the impact of government initiatives in these sectors and the like, we should be
able to do so when we build such a system. The programme on
e-governance also throws up data of non-revenue nature
which will be useful for analysis.
External sector-related transactions data are collected by
customs and banking system and centralised for processing by
the Directorate General of Commercial Intelligence and Statistics (DGCIS) and the RBI. We also have other information to
build data base for the rest of the world. These data still suffer
from limits of silos. The age-old question of divergence between DGCIS and RBI data could not be tracked due to unsurmountable complexities. We had a major error in estimation of
external trade data in 2012 due to systemic problems on transcription between customs and DGCIS data. There are other
issues on coherence of this data with our trade partners. We
need to take steps to overcome these problems over time.
Price statistics is one of the most used barometer of pressures building up in the economy. We have a well-established
system of price collection for Wholesale Price Index and
Consumer Price Index. We also have certain data for
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transactions in capital market, money market, commodity


market, real estate market and so on. Even with this, we have
certain data gaps for the services sector. Measures are afoot to
bridge these gaps.
We collect data on a few leading indicators of the economy
through regular surveys. Data on investment expectations,
housing starts, capacity utilisation, order books and the like
fall in this category. The RBI analyses these data for inputs on
monetary policy.
The Human Development Index (HDI) is a composite of literary and educational achievement, life expectancy of citizens
and per capita income. The World Bank also suggests inclusion
of basic human rights, access to just legal system, literacy, and
good health in the index. We need to collect these data along
with any others required for evaluating Sustainable Development Goals (SDG) as a target.
Regional statistics is an important part of NSS. India is a vast
country with many dimensions of diversity, which can hardly
be compared to any other country. China comes closest in
terms of size of population but not on approaches to manage
the economy. We need to inform the people at all levels not
only on how the economy is shaping through hard facts but
also on how we are using our factor endowments optimally.
Each state produces a set of data as part of its statistical system. Some states go even up to the district level for estimation
of domestic product. The HDI is available at the district level.
Banking statistics under BSR even gives data for population
groups: urban, semi-urban, and rural at district level. District
is an important unit of administration and execution of policies. It more or less represents a parliamentary constituency.
We need to develop a regular system of generation of statistics
at least up to this level. If we include them as part of dimension
tables in DW we will achieve this objective.
Magic of Business Intelligence Systems

The new digital age is now at its full flow in every walk of life.
We also have technology to sift through huge volume of information for meaningful analysis. There are a number of initiatives through e-governance designed to capture valuable data.
These data can become fertile fields for micromacro linkages
necessary for deeper insight on the distributional characteristics over time, space and multiple dimensions. There are
examples to follow. Vivek Kundra, Chief Information Officer,
Columbia, a young person of Indian origin picked up by Barack
Obama, was driving a $76-billion-dollar-project on federal
technology for creating dashboards using open source technology for bootstrapping the bureaucracy (refer Macrowikinomics). Amazon and Google are classic examples of pursuing business gainfully using huge volume of transaction data
for customer relationship management. Data analysts are
now highly valued for churning these data using data mining
tools. We need to develop systems for official statistics on
similar lines.
First, the issue of data quality is critical for maintaining
credibility of official statistics. Second, there should be full
audit trail for checking the integrity of collected data. Third,
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there should be coherence in the sense of connectedness and


mutual consistency. Fourth, data should be easily accessible
for its dissemination as contemplated in Special Data Dissemination Standard. The structuring of the data should be done in
such a way that it incorporates metadata, clearly stating data
definitions and aggregation rules. These are the trends in the
area of information management followed by leading country
systems on official statistics.
We need a professional approach on use of IT for official statistics. The knowledge of software, hardware, distributed network, cloud, security, business continuity is sheer necessity for
effective IT support. The expertise going into the design of
architecture should distinguish between alternatives for appropriate solution. For example, in the IT-related world, it has
become a hype of some sort to name Big Data as a panacea
for all ills. It is considered powerful for handling unstructured
data like text, audio and video, exploiting the power of hardware and software for retrieval and analysis. However, its
choice for Official Statistical Information System is not obvious (Albert 2014) as big need not always mean better for the
task at hand. The concepts of intelligent systems based on DW
(Kimball 2002) are still very relevant for structured data needed for national accounts.
DW is designed to organise data in servers in a way that
allows culling out of right information at the right time for the
right purpose. It follows an optimised process of structuring
data, using facts and dimensions as parts of schema, to provide a big picture. The beauty is that we can drill down, drill
up or drill across at our will to see things the way we like. We
can exploit the features considered for specification of dimensional modelan IT jargongoing into the DW technology for
keys required for retrieval of optimised data very efficiently
to examine how the distribution in its various dimensions is
changing. The Geographical Information System (GIS) can be
superimposed on granular data to give a vivid picture of
the entire distribution and its parts. India-specific GIS is
now matured and remote sensing data are amenable to support the collection of data on agriculture, environment and
the like.
The processes and technologies that go into creating and
managing the database system should adhere to the principles
of reliability, accuracy and security. We should gradually shift
to online process of data collection, wherever possible. Some
of the surveys should be backed up by audiovideo sessions to
collect information considered qualitative such as inflation
expectations surveys. The information content should fulfil
the requirement of consistency while being complete. This
calls for checks on inconsistencies, incompleteness and other
data quality issues as governing principles. XBRL is an example
of such a system. We should introduce audit trails for verification of quality, a formula for aggregation at every stage and a
due process of authorisation for additions and alterations. If
we follow these principles we will be able to build a high
quality, meaningful and useful information system which
will emerge as authoritative and timely, contributing greatly
to credibility.
54

We can develop systems to reach up to the village panchayat


level for data for informed decisions on economic development.
However, this may not be necessary immediately. There may
be questions on limits of fragmented regional picture based on
only information related to particular geography because the
forces of demand and supply go beyond their limits. However,
we need to appreciate that the so-called externalities do not
happen out of the blue; we should be in a position to provide
for data-gauging pressure points relating to supply and demand in
the market at different layers of the economy. The end result
will be nothing short of revolutionary. We cannot possibly
jump the learning curve and hence we may have to contain our
ambition till the opportune time, restricting disaggregation up
to the district level at this stage. However, we should not lose
sight of design elements for extension of fields as and when the
situation arises.
How to Integrate Key Statistics

There has been a paradigm shift in our approach to economic


analysis, and the statistical system needed to throw up data
required for empirical validation of theory. These data should
capture the behaviour of individual households, firms and
governments. The system of data collection for the country is
very elaborate, but there are silos. We need to integrate them
for a holistic approach on the NSS. This is not likely to get many
buyers for reasons we may call as status quo. We need to
overcome these hurdles. Let us try to put forth certain thoughts
to convince people to go for envisaged shift.
The first is the conviction. H G Wells, quoted at the inception
of this paper, was a highly creative thinker and educationist,
well-known for his prophetic observations based on socialistic
convictions. He died in 1946. His book The Outline of History
carries the theme that the world must be saved by education
and not by revolution. And his quote is the strongest advocacy
of statistics for good citizenship. Today, the thinking of some
of the most successful business firms have been shaped by
intelligence found in data. Once again, Amazon and Google
are classic examples of this. These organisations were propelled by certain ethos and creative instincts. Can we find
someone in the public policy sphere to have similar motivation
for public welfare?
Next, we need to generate ideas and disseminate them
widely for setting the momentum of growth in every possible
way. As Romer (1993) observed, Nations are poor because
their citizens do not have access to the ideas that are used in
industrial nations to generate economic value. Is it possible
to gear up the government machinery to set an example for
citizens to embrace ideas for higher productivity and quality
in work? We need to find wide use of intelligence for the
project to succeed.
Third, as management guru Porter (1990) observed, Prosperity of nations, clusters and corridors is the direct and verifiable result of improvements in the capabilities at the microeconomic level. Aggregates must by necessity focus on very
broad and general determinants that are not sufficiently complete and operational to guide company or public policy.
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Microeconomic structures determine the ability of firms to be


creative and productive. They are the vital determinants of
national competitiveness and prosperity. We need to figure out
how to go about creating an information base for this.
Fourth, as Douglas North (1990) observed, Understanding
economic change includes everything for which we cast a net
much broader than purely economic change because it is a
result of changes (1) in the quality and quantity of human
beings; (2) in the stock of human knowledge particularly as
applied to the human command over nature; and (3) in the
institutional framework that defines the deliberate incentive
structure of the society. A complete theory of economic change
will therefore integrate theories of demographic, stock of
knowledge, and institutional change. We are far from having
good theories of any of these three, much less of the three
together, but we are making progress. This is the crux of
the matter.
Fifth, Robert E Lucas (1976) suggested that reliable empirical relationships based on deep microeconomic structure
of models, in which economic outcomes are the aggregate of
decisions by rational individuals maximising their own utility,
were needed.
Finally, as Amartya Sen (1982) said,
There have, in fact, been very few systematic attempts at testing the
consistency of peoples day-to-day behaviour ... what counts as admissible evidence remains unsettled. If today you are to poll economists
of different schools, you would certainly find coexistence of beliefs
(I) that the rational behaviour theory is unfalsifiable, (II) that is falsifiable and so far unfalsified and (III) that it is falsifiable and indeed
partly false.

These considerations raise serious doubts on the existing


macroeconomic framework not supported by micro observations and dependencies. The causes of business cycles lie hidden in economic dynamism explained by multiplicity of factors that could range from economic, political, demographic,
environmental and so on. We need to understand and quantify
them, construct dependable behavioural relationships providing handles for policy. It is a huge challenge, but can be handled brick by brick for a new paradigm to emerge out of this
effort in the course of time. A fundamental requirement for
this is the versatility of the Official Statistical System which
can be achieved through a process of integration of key statistics collected by the system.
Concluding Remarks

Social structures are conceived of as systems of laws and forces


forming parts of different disciplines. Each discipline is a speciality devoted to the objective of discovering how these forces
change the society to make it a much better place for all. Economics is the study of what makes people and its environment
a better place through optimal use of resources. This paper is
based on the inspiration that macrowhich dominates economic theorisationis not good enough, particularly for such
a vast country which has heterogeneity at each and every level.
In addition to distributional characteristics of the aggregates
we have challenges on theory; for instance: (i) whether money
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is neutral or not; (ii) whether government intervention helps


in reducing imbalances in regional and sectoral disparity;
(iii) whether dominant agents hinder development or not; and
finally (iv) the position of other market imperfections in analytical framework. Even if we can explain aggregate growth
using macroeconomics and prescribe policy for overall growth
and stability with reasonable success based on such a study,
we will not be able to shed useful insight on the complex
behavioural dynamics of the economy and benefits that can be
derived through various strands of government interventions.
In other words, the market alone with its optimising behaviour
is not enough. The game the agents play is also important. It is
not only top-down, but also bottom-up. Statistical science, as
an empirical discipline, is focused on providing data and tools
to test validity of the theory, in all its dimensions.
We know very well that development is much more than
growth, which encompasses empowerment of people for sustaining the fruits of change it brings about in their daily life.
Even if we could maintain a stable economy for economic development and sustained high growth could be the pillars of
the superstructure, this by itself does not ensure inclusive
growth. There is high correlation between improvement in
productivity and quality to raise income and standard of living. However, the forces and managerial competence making
them happen are in the realm of micro concerns. We need to
analyse and measure them like we do in Data Envelopment
Analysis in order for them to be of practical use. If we get unit
level data, we will be able to carry out such exercise for the
benefit of enterprises.
We need a responsive and efficient rural financial market
to equilibrate demand and supply of money at a price consistent with actual risk and costs. This is easier said than done.
The lack of appreciation of business possibilities due to
asymmetry of information on risk and return, and want of
enthusiasm of financial institutions in spite of goading by the
RBI and the government make resource availability and use
for rural development suboptimal; the so-called ruralurban
divide continues. The poor are left to approach microfinance
institutions and moneylenders who, through high interest
rates, corner a significant part of their return. If they still
survive, it is due to the opportunity they get to convert their
idle labour into marketable products. The so-called demographic dividend also remains elusive. We need new analytical paradigm and data for empirical validation which can
capture the dynamics well, shedding enough light on distributional characteristics, its variety and diversity, and explain
reality much better.
In sum, we are under the grip of dangerously aggregated
macroeconomics that does not reveal the variety and diversity
of the real economy. There are certain vital aspects of the
economy which are largely not parts of this analytical framework because the variables used to represent them are not adequate. The practical value of macroeconomics will be greatly
enhanced if it can cover underlying microeconomics well. This
is because the economy is not as frictionless as the theory
assumes. The prerequisite for a market to function efficiently
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is the efficient information system, which is the responsibility


of a good NSS. We need to be sufficiently prepared to deliver
on this responsibility, well. We need to set priorities for collection and dissemination of key statistics efficiently. We have the

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Oral History Archives


On behalf of EPW, the Centre for Public History, Srishti School of Design, Bengaluru,
has put together extended interviews of 30 individuals associated with Economic
Weekly and EPW.
These are interviews with present and former staff, readers, writers and trustees, all
closely associated with the journal.
The interviews cover both the EW and EPW years, some are of the 1950s, others the
1960s and some even later. Each interview lasts for at least an hour and a few are
multi-session interviews.
The interviews maintained in audio files (with transcripts) are available at the EPW
offices in Mumbai for consultation by researchers.
Individuals interested in researching those times and the history of EW/EPW may write
to edit@epw.in to explore how the files may be heard and used.

JUly 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

DISCUSSION

Trade Unions in Banks


Remain Relevant
A Rejoinder
T R Bhat

Are Trade Unions Relevant in


the Indian Banking Sector?
by Bino Paul G D and Pooja
Gupta Mahurkar (EPW, 16 April
2016) contains surmises and
generalisations without verifiable
supporting data, apart from
glaring contradictions. Further,
it does not address the current
challenges before bank unions.

T R Bhat (bhat_tr@yahoo.co.in) was General


Secretary (198193), President (19932007)
and Chairman (200709) of Mangaluru-based
Corporation Bank Officers Organisation. He
was Joint General Secretary (19952009) of
All India Bank Officers Confederation and
President (19952009) of All India Private
Sector Banks Officers Federation. He lives in
Mangaluru.
Economic & Political Weekly

EPW

july 9, 2016

re Trade Unions Relevant in the


Indian Banking Sector? by
Bino Paul G D and Pooja Gupta
Mahurkar (EPW, 16 April 2016) in its attempt to study the effect of trade unions
in banking in India, fails to focus on current problems and emerging challenges.
Distinction between IR and HRM
The authors classify the issues of dealing
with the two categories of bank employees
as paradigms: handling non-managerial
jobs as industrial relations (IR) and handling managerial jobs as human resources
management (HRM). In the present context this kind of distinction is illogical.
HRM is a broad concept. Human resources literally encompass the entire workforce, irrespective of the jobs, the roles and
the tenure of service (permanent, casual
and contractual). Optimal utilisation of
every employees capabilities becomes
imperative for the success of the enterprise. This applies to banks as well.
Who, then, constitutes the management in banks? It becomes a relative
term in hierarchical organisations. For
non-supervisory employees, the supervisors are the management. For the
supervisory staff, those in the top executive cadre are the management.
Differences between each category of
employees and the next category in the
hierarchy are likely to emerge from time
to time. Treating the conflicts between
non-supervisory groups of employees and
the management as an IR conflict, and
those between the supervisory group
and the management as HRM issues has,
therefore, no logical basis.
Generalisations
The article makes a series of generalisations
about bank unions. A few are given below:

vol lI no 28

(i) After the first Narasimham Committee


Report (NCR) on banking reforms (1991)
there was chronic insecurity for workers.
(ii) As unions have no representation in
policymaking bodies, the union movement is not strong.
(iii) Many banks do not give mandate to
Indian Banks Association (IBA) to negotiate wage revision.
(iv) The dominance of caste- and genderlinked discrimination within the union
movement has affected union efficacy.
(v) The prospects for strong union movement are weak because of risk aversion
by employees, price sensitive financial
products, technology-driven products and
surplus labour supply.
All these claims are debatable.
Chronic Insecurity of Workers?
The NCR had essentially addressed the
reforms in banking in relation to capital
adequacy, regulation, directed lending
and adoption of international accounting
standards to make the banks financially
sound. None of its recommendations impinged on employees security. If there is
any, the authors have not spelt them out.
In conformity with the changing times,
banks had to adopt new technology in
their operations. In doing so, it is to the
credit of both the unions and the managements in the banks that through
bipartite settlements, large-scale automation was introduced progressively.1
This, however, has not affected the security of employment.
In 200001, at the behest of the
government, public sector banks (PSBs)
introduced the Voluntary Retirement
Scheme (VRS) for employees. The banks
offered attractive incentives for whoever
volunteered to retire early. The objectives
were twofold: to cut costs and to infuse
new blood. As much as 14.24% (about
1,25,000) of the employees retired under
VRS. Thereafter there has been massive
recruitment of employees at all levels in
the banks. The total workforce of scheduled commercial banks (PSBs have a lions
share in them) was 8,69,412 as on March
2009. It reached 12,91,542 in 2015 according to Reserve Bank of India (RBI) data.
These new employees are also unionised.2
57

DISCUSSION

Bank employees continue to enjoy


fairly reasonable job security even today.
The workmen and the officers are governed by the provisions of the bipartite
settlements (BPS) and the Officers Service
Regulations (OSR) respectively. The hiring as well as firing of bank employees of
all categories has to be in conformity
with these time-tested regulations. The
inference of erosion of job security of
bank employees is, therefore, not tenable.
Unions on Policymaking Bodies
Bank unions associate themselves with
policymaking in PSBs at two levels. At a
formal level they have a representative
on the board of directors of each PSB.
This system came into force after the
nationalisation of banks. The Bank Nationalisation Acts (1970 and 1980) have a
provision to appoint one director each
from among the workmen and the officer
category of employees. The persons to
be appointed by the government as owner,
are generally the principal office-bearers
of recognised unions of workmen and
officers. The recognition of a union is
acc
orded by the management on the
basis of its strength; the one with the

majority is recognised as sole bargaining


agent for its constituency.
At another level, through the machinery of bipartite discussions both at the
industry and the individual bank, the
unions influence the policies. Conventionally, these discussions were limited
to wage issues. But over the years issues
like technology upgradation, customer
service, business strategies, prevention
of frauds, motivation, skill building, and
training have figured in these meetings.3
It is relevant to note that union movements became active and strong much
before such formal participation was
accepted. The formal recognition came
as a consequence of the activism. Therefore, the view of the authors that as
unions have no representation in policymaking bodies, the union movement was
not strong, is untenable.
Not Many Banks under IBA?
The article contends that fewer number
of banks give the mandate to IBA to
negotiate wage revision. The 10th BPS
signed by IBA with the unions and the
joint note signed with officers associations in May 2015 had the mandate from

43 banks (25 PSBs, 11 private banks and


seven foreign banks) which accounted
for more than 85% of the workmen and
officers in the banking i ndustry. It is only
the new
generation banks and newly
established foreign banks which do not
join the IBA team. It is not the number of
banks that matters, it is the number of
employees covered by the settlements
and joint notes which are relevant in
assessing the effectiveness of unions.
Caste and Gender Discrimination?
The authors have presented a laboured
argument that socially vulnerable groups
(SVGs) of employees are discriminated
against in appointment, assignments,
posting and in the workplace. They buttress their view by saying that SVGs are
given menial jobs like subordinate staff
(sub-staff) and clerks.
Before drawing any conclusion we
need to understand the hierarchy of
employees in banks, their qualifications
and the nature of their jobs. The job of a
sub-staff does not need much education.
Their job, like in any public office, is to
run errands inside and outside the office;
carry the books into the safe room, stitch

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july 9, 2016 vol lI no 28 EPW Economic & Political Weekly

DISCUSSION

documents, bring tea to entertain guests,


go to the post office to deliver letters,
accompany officers while remitting cash,
etc. In the post-nationalisation era, these
posts were to be filled up from the list of
job aspirants registered with local employment exchanges with reservations
for persons from SVGs as per government guidelines. This mandate continues
even today.
For clerks, the entry-level qualification
now is a graduation degree. Traditionally their job was to record the banks
transactions and maintain books of accounts. There is mandatory reservation
for SVGs. These ground realities are the
causes for larger enrolment of persons
belonging to SVGs into the lower cadre.
Neither the bank managements nor
the unions have a say in the posting of
employees belonging to SVGs to menial
and clerical assignments.
The article contains a statement that
for inspection jobs, which involves constant travelling, officers hailing from
SVGs are posted. There is, however, no
supporting data to substantiate this claim.
As a former insider, I had come across
several cases of officers from upper castes
asking for inspection assignments for
two reasons: there is no risk of accountability unlike the field assignment, and
continuous tours would fetch them additional allowances. Some would choose
such assignment as it would widen their
knowledge of ground realities.
That there is discrimination in canteen
and accessing drinking water is not
borne by facts. As a union activist for
nearly three decades I had moved extensively in different places all over India,
dined with thousands of colleagues
including the members of the sub-staff.
There was not a single case of such discrimination practised in the PSB for which
I worked.4 There are exclusive associations of SVGs in the PSBs which have not
pointed out the existence of such practices. Members of these associations are
also members of regular bank unions.
In the matter of promotion opportunities to SVGs, all the PSBs are governed by
board-approved promotion policies tempered by relevant government guidelines.
In recent years, PSBs have seen many
officers belonging to these groups going up
Economic & Political Weekly

EPW

july 9, 2016

the promotion ladder to become general


managers, executive directors and chief
executive officers (CEOs).
That bank unions do not evince interest
in enrolling employees of SVGs as members is not corroborated by verifiable
data. On the contrary, unions of both the
workmen and officers are eager to enrol
the new entrants of all categories into
their folds as they believe that larger
the numbers, the greater is the strength.
In several associations today members
belonging to SVGs hold key positions at
the highest level.
The authors contentions that women
are discriminated in banks is surmised
based on exceptional incidents shared
with them by respondents. With the
pan-India character of PSBs, common
rules governing transfers and postings
of officers, the scope for gender-based
discrimination is limited. Most PSBs
today have mechanisms to redress grievances to address complaints of sexual
harassment at the workplace.
In many banks, in consultation with
unions, the policies on transfers and
postings are suitably modified to accommodate women employees. When both
spouses are working in the same bank
they are generally posted in a centre
where there is more than one office. Single
women are not posted to remote corners
where there are no basic amenities like
accommodation and conveyance. For
promotion from one scale to another, an
officer has to undergo compulsory rural
service (branches in centres with a population up to 10,000). As many rural
areas do not have basic amenities for
stay and commuting, women need not
undergo rural service for promotion.
Instead, their service in semi-urban centres (population of 10,000 to 1,00,000)
is deemed as rural service.
The statement that as women are generally teetotallers, and that they suffer
in the race for promotions is once again
not borne out by evidence. The very fact
that during the last decade and a half
several women have occupied the position of CEOs of PSBs is a proof of the
absence of gender-based discrimination
in promotions.5
In the trade union movement too, there
is no discrimination against women. In

vol lI no 28

fact both the workmen and officers


associations have, over years, set up
separate womens wings with a woman
office bearer who would be in the central
committee of the respective union. Some
unions have made pioneering efforts in
integrating women into union activism.6
In the light of these facts, the statement
made by the authors that women who
hold key positions in a union are subjected
to various forms of sexual harassment
and defamation threats is a generalisation based on surmises.
The conclusions about dominance of
gender- and caste-based discrimination
in Indian banks and bank unions are,
therefore, not in conformity with facts.
Weak Prospects for Unions?
The article argues that because of risk
aversion by employees, price sensitive
financial products, technology-driven
products, and surplus labour supply, the
prospects of strong unions emerging are
low. It is, however, unable to provide
empirical data about risk aversion and
price sensitivity of products. The weaknesses of the unions are on account of
different factors.
World over, the trade union movement itself is on the decline. The deepening consumerism makes the new employees look primarily into financial
benefits that union memberships can
provide. With the standardised service
conditions, promotion and placement
policies in banks, the new employees do
not find collective resistance relevant
any more. They join the unions under
peer influence, but their participation in
union meetings and activities has been a
matter of concern for senior leaders of
bank unions.7
The managements have also been
aggressive in the recent years. For legitimate trade union protests, disciplinary
actions are initiated compelling unions
to approach the judiciary to redress grievances. The case of disciplinary actions
against State Bank officers in 2012 is one
example (Bhat 2013). The dismissal of
the general secretary of the Keralabased Dhanlaxmi Bank Officers Organisation in July 2015 triggered a prolonged
strife in that bank. The most recent case
is of IDBI Bank management bringing a
59

DISCUSSION

judicial restraint on its officers against


going on strike in March 2016.
Contradictions and Inaccuracies

The article contains many observations


which are inconsistent, contradictory and
inaccurate. I quote just two examples:
(i) Kanha Gedam joins the Collective Bank
(a PSB) in 1995; serves it for 20 years; he is
active in the union and renounces promotion. As the union is not sensitive to the
problems of SVGs he resigns and joins SC/ST
association in 1995 (p 75) (emphasis added).
(ii) On p 74, it is mentioned that the management of the bank cancelled the registration of the union. The powers to register,
and cancel the registration of, a trade union
is vested with the Registrar of Trade Unions
according to the Trade Unions Act, 1926 and
not with the management. The management
can only refuse to recognise the union or it
can withdraw the recognition granted after a
due process.

Challenges before Bank Unions


The periodic settlements between IBA
and bank unions at the industry level
and the structured bipartite relationship
in individual banks are critical evidence
of the continued relevance of the collective strength. While the ranks of bank
unions have grown progressively in the
recent years due to massive recruitment,
making the new entrants active in the
union movement is the biggest challenge before union leaders. The second
challenge is related to alternative strategies to realise their demands. The conventional strategies of work to rule,
demonstrations and strikes do not impact
the working of the banks on account of
varied choices like ATMs, mobile and internet banking available to the customers
to undertake their transactions. The
third challenge the unions have to seriously address is that of refurbishing
their poor public image. The paper fails
to focus on these challenges.
Notes
1

60

The Memorandum of Settlement dated 29 March


1987 between the IBA and unions was a landmark. In the 1990s officers associations were
also taken on board through additional compensation. The later settlements were more
broad-based. The unions also agreed for redeployment of surplus labour, if any, ensuring that
there was no retrenchment of surplus staff.
In Corporation Bank, out of 6,497 officers as on
December 2012, as many as 6,277 were unionised leaving 3.39% as neutrals. By December

2015 out of 8,474 officers 8,313 were unionised


leaving less than 2% non-unionised. A large
number of non-unionised officers belong to the
senior executive cadre.
Two specific cases merit attention here. In
199091, the Mangalore-based Corporation
Bank had organised a three-day workshop involving the top functionaries of recognised
workmen union and officers association and
top executives of the bank, including the chief
executive officer, to jointly evolve a strategy to
enhance the performance efficiency of the
bank which was under severe financial stress.
For more details see T R Bhat, In Search of an
Identity-CBOO through 25 Years (published by
Corporation Bank Officers Organisation, Mangalore in 1999, pp 3258). The next four years
saw a sweeping transformation of the bank to
emerge as a viable growing bank. The second
one was the attempt made by the State Bank of
India in 2006. In a conclave held in Jodhpur,
the leaders of both the unions and the management were involved in working out a strategy
for transforming the bank. For details see, Lal
and Tahilyani (2011).
While discharging my role as general secretary
of the officers association of a PSB, I had come
across cases of officers of SVGs asking for
change of their postings from one place to another. Their reasons were eye-openers: in their
places of posting they would not get houses on
rent as the landlords would refuse to rent out
houses to Scheduled Caste or Scheduled Tribe
employees/officers. A similar problem was encountered by a few minority-community officers.
We had to intervene on their behalf and get
their postings changed to places which were
more cosmopolitan in outlook.
The first case was of Ranjana Kumar. Starting
her career as a junior officer in Bank of India in
1966, she rose to become executive director of
Canara Bank. When later she was posted as
CEO to Indian Bank in June 2000, she had the
biggest challenge of her professional career:
turning around a sick bank which had 48%
non-performing assets. Her tenure ended in
December 2003 with the bank coming out of

woods. There have been more women CEOs of


PSBs in the recent years: Vijayalakshmi Iyer,
Archana Bhargava, H A Daruwalla, Shubhalakshmi Panse, Usha Ananthasubramaniam,
and Arundhati Bhattacharya. There are also
good number of women executive directors,
chief general managers and general managers
in PSBs.
In 1983, the then All India Confederation of
Bank Officers Organisations (AICOBOO) had
set up a separate national womens wing with a
senior activist as its convener. She was part of
the top policymaking body of AICOBOO. Corporation Bank Officers Organisation (CBOO)
set up an exclusive womens wing in 1985 with
a secretary to be elected from the women delegates to the general body. In 1995, CBOO
along with the Karnataka state unit of its national body All India Bank Officers Confederation (AIBOC) organised a state-level workshop with women in banking as the theme.
The two-day workshop was followed by a national convention leading to the setting up of a
national-level womens wing. Private sector
bank officers have gone further. Dhanlaxmi
Bank Officers Organisation elected a woman
as its president in 2013; Catholic Syrian Bank
Officers Association has a woman as its general secretary.
Several of my junior colleagues who today hold
key positions in different bank unions both at
the unit level and industry level have been
sharing with me that mobilising the members
for meetings is a difficult task. Even if their
travelling and food expenses are taken care of,
fewer and fewer members take these meetings
seriously.

References
Bhat, T R (2013): Right of Unions to Demonstrate
Peacefully, Economic & Political Weekly,
Vol 48, No 43, pp 1517.
Lal, Rajiv and Rachna Tahilyani (2011): State Bank
of India: Transforming a State Owned Giant,
Sales and Marketing Case Study, Harvard Business School.

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data are provided for deposits, credit (sanction and utilisation), credit-deposit (CD) ratio,
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july 9, 2016

vol lI no 28

EPW

Economic & Political Weekly

CURRENT STATISTICS

EPW Research Foundation

Wholesale Price Index

Foreign TradeMerchandise

The year-on-year (y-o-y) inflation rate based on WPI rose to 0.8% in May 2016
against (-) 2.2%, a year ago and 0.3% in April 2016. The index for primary
articles increased by 4.6% in May 2016 against (-)1.1% a year ago, as the index
for food articles grew substantially by 7.9% compared to 2.7% in May 2015. The
index for fuel and power continued to decline for 19th month in a row, but, at
a decelerated rate of -6.1% in May 2016 from (-)9.4%, a year ago. The index for
manufactured products rose by 0.9% in May 2016 against a fall of (-)0.5% in
May 2015.

The merchandise trade deficit narrowed down by (-)39.7% to $6.3 bn in May 2016 from
$10.4 bn, a year ago. Exports contracted marginally by (-)0.8% to $22.2 bn in May 2016
compared to $22.3 bn in May 2015. Imports declined by (-)13.2% to $28.4 bn in May
2016 from $32.8 bn, reported last year. Oil imports fell by (-)30.5% to $5.9 bn and
non-oil imports by (-)7.1% to $22.5 bn, in May 2016 compared to $8.5 bn and $24.2 bn,
respectively, in May 2015. Exports and imports stood lower by (-)3.7% and (-)18.2% to
$42.7 bn and $53.9 bn in the current financial year so far (AprilMay 2016-17)
compared to $44.4 bn and $65.8 bn, respectively, in the corresponding period last year.

Consumer Price Index

Index of Industrial Production

The CPI inflation rate rose to a 21 month high to 5.8% in May 2016 compared to
5.0%, a year ago and 5.5% in April 2016, as the consumer food price index
increased sharply by 7.6% compared to 4.8% in May 2015 and 6.4%, a month ago.
The CPI-rural and CPI-urban inflation rate increased to 6.5% and 4.9%,
respectively, in May 2016 from 5.5% and 4.4%, respectively, in the corresponding
month last year. As per the Labour Bureau data, the CPI inflation rate for
agricultural labourers and industrial workers increased to 6.0% and 6.6%,
respectively, in May 2016, compared to 4.4% and 5.7%, in May 2015.

The y-o-y growth rate of IIP declined to -0.8% in April 2016 against 3.0%, a year ago.
The index of eight core industries grew by 2.8% in May 2016 compared to 4.4%, a
year ago. Growth in coal, electricity, refinery products and cement decreased to
5.5%, 4.6%, 1.2%, 2.4%, respectively, in May 2016, from 7.6%, 6.0%, 7.8%, and 2.7%
in May 2015. Crude oil and natural gas production declined by (-)3.3% and (-)6.9%,
respectively, in May 2016 against 0.8% growth and a (-)3.0% fall, respectively, a
year ago. Growth in fertiliser production increased substantially to 14.8% in May
2016 from 1.3% in May 2015, while steel production inched up to 3.2% from 2.0%.

Movement of WPI Sub-indices JanuaryMay 2016

Merchandise Trade May 2016

Year-on-Year in %
12

Primary Articles

Exports
Imports
Trade Deficit

4.6%

22.2
28.4
6.3

7.8
11.9
29.5

Over Year
(%)

(AprilMay)
(201516 over 201415) (%)

-0.8
-13.2
-39.7

-3.7
-18.2
-48.0

Trade Deficits April 2015May 2016

Manufactured Products
-6

$ billion

-6.1%

Fuel and Power

-12

Over Month
(%)

Data is provisional. Source: Ministry of Commerce and Industry.

0.9%

May 2016
($ bn)

-$2.4 bn
Non-oil Trade Deficit

-3

-$3.9 bn

-18
January
2016

February

March

April*

-6

May*

-$6.3 bn

Oil Trade Deficit

* Data is provisional.

-9

Total Trade Deficit

Trends in WPI and Its Components May 2016* (%)


Weights

Over Month

Over Year

100
20.1
14.3
14.9
65.0

1.4
2.4
2.8
2.8
0.5

0.8
4.6
7.9
-6.1
0.9

All commodities
Primary articles
Food articles
Fuel and power
Manufactured products

-12

Financial Year (Averages)


201314 201415 201516

6.0
9.8
12.8
10.2
3.0

2.0
3.0
6.1
-0.9
2.4

-2.5
0.2
3.4
-11.7
-1.1

* Data is provisional; Base: 200405=100. Source: Ministry of Commerce and Industry.

-15
-18
April
2015

Jan
2016

Oil refers to crude petroleum and petroleum products, while non-oil refers to all other commodities.

Movement of Components of IIP Growth April 2015April 2016


Year-on-Year in %

Movement of CPI Inflation April 2015May 2016

16

Year-on-Year in %

14.6%
Electricity

10
8
8
6

6.5%
5.8%
4.9%

Rural

4
2
0

CPI (Combined)

1.4%

Manufacturing

-3.1%

Mining
-8

April
2015

April*
2016

* April 2016 are quick estimates; Base: 200405=100.

Urban

Growth in Eight Core Industries May 2016* (%)


April
2015

Jan
2016

May*

Weights

* May 2016 is provisional. Source: Central Statistics Office (CSO); Base: 2012=100.

Inflation in CPI and Its Components May 2016* (%)


Weights

CPI combined
Consumer food
Miscellaneous

Latest Month Over Over


Index Month Year

Financial Year (Avgs)


201415 201516

100 128.6
39.1 133.9
28.3 120.7

1.0
2.0
0.6

5.8
7.6
4.0

5.9
6.3
4.6

4.9
4.9
3.7

275
860

1.5
1.4

6.6
6.0

6.3
6.6

5.6
4.4

CPI: Occupation-wise
Industrial workers (2001=100)
Agricultural labourers (1986-87=100)

* Provisional. Source: CSO (rural and urban); Labour Bureau (IW and AL).

General index #
Infrastructure industries
Coal
Crude oil
Natural gas
Petroleum refinery products
Fertilisers
Steel
Cement
Electricity

100.0
37.9
4.4
5.2
1.7
5.9
1.3
6.7
2.4
10.3

Over Month

-11.2
4.1
6.4
4.1
6.8
-1.0
24.2
11.9
0.8
0.4

Over Year

-0.8
2.8
5.5
-3.3
-6.9
1.2
14.8
3.2
2.4
4.6

Financial Year (Avgs)


201415
201516

2.8
4.5
8.1
-0.9
-4.9
0.3
-0.1
4.7
5.6
8.4

2.4
2.7
4.6
-1.4
-4.2
3.8
11.3
-1.5
4.7
5.3

* Data is provisional; #April 2016; Base: 200405=100. Source: CSO and Ministry of Commerce and Industry.

Comprehensive current economic statistics with regular weekly updates are available at: http://www.epwrf.in/currentstat.aspx.

Economic & Political Weekly

EPW

JULY 9, 2016

vol LI no 28

61

CURRENT STATISTICS

EPW Research Foundation

Indias Quarterly Estimates of Final Expenditures on GDP


` crore | at 201112 Prices

Private final consumption expenditure


Government final consumption expenditure
Gross fixed capital formation
Change in stocks
Valuables
Net trade (Exportimport)
Exports
Less Imports
Discrepancies
Gross domestic product (GDP)

201415
Q1

201516

Q2

1406817
294338
832420
48976
42871
-40831
620869
661700
-49687
2534903

(8.2)
(9.0)
(8.3)
(23.0)
(16.3)

Q3

1422029
322557
828754
48434
38194
-55355
625875
681230
-36835
2567778

(11.6)
(-0.6)
(7.5)

(9.2)
(15.4)
(2.2)
(20.6)
(0.3)
(1.1)
(4.6)
(8.3)

1495823
261886
843733
45077
37174
-45813
636468
682281
21305
2659185

Q4

(1.5)
(33.2)
(3.7)
(16.0)
(10.8)
(2.0)
(5.7)
(6.6)

1539614
223826
903344
52521
55036
-13988
625191
639179
29933
2790285

Q1

(6.6)
(-3.3)
(5.4)
(21.6)
(32.2)

1504442
293720
891627
50754
43138
-60253
585324
645577
761
2724188

(-6.3)
(-6.1)
(6.7)

Q2

(6.9)
(-0.2)
(7.1)
(3.6)
(0.6)

1511464
333116
909117
51068
42932
-78201
599264
677465
-7146
2762350

(-5.7)
(-2.4)
(7.5)

Q3

(6.3)
(3.3)
(9.7)
(5.4)
(12.4)

1618333
269808
853858
48547
42192
-59076
579684
638760
78020
2851682

(-4.3)
(-0.6)
(7.6)

Q4

(8.2)
(3.0)
(1.2)
(7.7)
(13.5)
(-8.9)
(-6.4)
(7.2)

1666888
230308
886147
55448
45549
-15520
613471
628991
143210
3012029

(8.3)
(2.9)
(-1.9)
(5.6)
(-17.2)
(-1.9)
(-1.6)
(7.9)

Indias Overall Balance of Payments (Net): Quarterly


201415 ($ mn)
Q4

Q3

Current account
Merchandise
Invisibles
Services
of which: Software services
Transfers
of which: Private
Income
Capital Account
of which: Foreign investment
Overall balance

-7721
-38635
30913
19982
17844
16428
16521
-5497
22864
13194
13182

Q1

-645
-31560
30916
20116
18625
16425
16600
-5625
30023
22993
30149

-6132
-34175
28043
17751
17512
16153
16267
-5861
18637
10226
11430

201516 ($ mn)
Q2
Q3

-8559
-37173
28614
17835
18058
16263
16421
-5484
8121
3150
-856

Q4

-7121
-33975
26854
18013
18556
15250
15305
-6408
10915
11256
4056

201415 (` bn)
Q4

Q3

-338
-24755
24417
16077
17328
14961
15146
-6621
3455
7259
3274

-478 [-1.5]
-2393
1915
1238
1105
1017
1023
-340
1416 [4.5]
817
816 [2.6]

Q1

-40 [-0.1]
-1964
1924
1252
1159
1022
1033
-350
1869 [5.6]
1431
1876 [5.7]

201516 (` bn)
Q3

Q2

-389 [-1.2]
-2169
1780
1127
1111
1025
1033
-372
1183 [3.7]
649
725 [2.3]

-556 [-1.7]
-2415
1859
1159
1173
1057
1067
-356
528 [1.6]
205
-56 [-0.2]

Q4

-469 [-1.4]
-2240
1770
1187
1223
1005
1009
-422
720 [2.1]
742
267 [0.8]

-23 [-0.1]
-1671
1648
1085
1170
1010
1022
-447
233 [0.6]
490
221 [0.6]

Figures in square brackets are percentage to GDP.

Foreign Exchange Reserves


Excluding gold but including revaluation effects

` crore
$ mn

Variation
24 June
2016

2284580
338070

26 June
2015

31 Mar
2016

Over
Month

Over
Year

2124640
334565

2229020
337605

32050
345

194470
6565

Financial Year So Far


201516
201617

114240
13256

Monetary Aggregates
` crore

Money supply (M3) as on 10 June


Components
Currency with public
Demand deposits
Time deposits
Other deposits with RBI
Sources
Net bank credit to government
Bank credit to commercial sector
Net foreign exchange assets
Banking sectors net non-monetary liabilities
Reserve money as on 24 June, 2016
Components
Currency in circulation
Bankers deposits with RBI
Other deposits with RBI
Sources
Net RBI credit to Government
of which: Centre
RBI credit to banks & commercial sector
Net foreign exchange assets of RBI
Govts currency liabilities to the public
Net non-monetary liabilities of RBI

Outstanding
2016

Over Month

Over Year

11915660

14280 (0.1)

1678660
969580
9254060
13360

560
19020
-5460
160

(0.0)
(2.0)
(-0.1)
(1.2)

216220
83210
803280
2960

3623950
7776040
2522980
2029210
2165690

120390
-12520
12610
106190
9680

(3.4)
(-0.2)
(0.5)
(5.5)
(0.4)

363110
610370
144500
14410
270840

201516

1732410
420030
13250
660460
659440
45160
2438670
21910
1000500

-580 (-0.0)
10310 (2.5)
-50 (-0.4)
30330
29820
-31440
31570
0
20770

(4.8)
(4.7)
(-41.0)
(1.3)
(0.0)
(2.1)

1105680 (10.2)

(As on 10 June 2016)

Aggregate deposits
Demand
Time
Cash in hand
Balance with RBI
Investments
of which: Government securities
Bank credit
of which: Non-food credit

Capital Markets
S&P BSE SENSEX (Base: 197879=100)
S&P BSE-100 (Base: 198384=100)
S&P BSE-200 (198990=100)
CNX Nifty (Base: 3 Nov 1995=1000)
Net FII Investment in equities (US $ Million)*

Over Month

1 July
2016

27145
8486
3539
8328
168529

(-3.1)
(-0.8)
(0.1)
(-1.5)
(0.0)

10800
18640
-7850
-1840
-6490
39340
39400
-14480
-460

(0.1)
(2.2)
(-0.1)
(-2.9)
(-1.7)
(1.5)
(1.5)
(-0.2)
(-0.0)

Month
Ago

26714
8284
3445
8180
167758

201415

201516

322660
40486

218620
16297

Financial Year
201415

201314

80570
-27440
210280
-2090

(5.0)
(-2.8)
(2.3)
(-13.5)

104760
58760
965330
-1270

(9.2)
(7.8)
(14.9)
(-39.2)

140360
79650
800140
12630

(11.3)
(9.8)
(10.7)
(641.1)

211910
105390
786020
850

(15.3)
(11.8)
(9.5)
(5.8)

(11.1)
(8.5)
(6.1)
(0.7)
(14.3)

253440
123040
127830
244850
-33610

(8.4)
(1.7)
(5.7)
(13.8)
(-1.7)

382920
-45880
32270
107990
-15050

(11.8)
(-0.6)
(1.3)
(5.6)
(-0.7)

335850
777430
287280
275010
217860

(12.4)
(13.7)
(17.6)
(16.8)
(14.4)

-37470
597340
326710
-144120
195710

(-1.2)
(9.3)
(17.0)
(-7.5)
(11.3)

233630
779290
240060
151270
252280

(7.8)
(11.1)
(10.7)
(8.5)
(13.1)

(48.6)
(48.7)
(-13.4)
(8.5)
(9.6)
(15.1)

49120 (3.4)
-77190 (-16.6)
-5540 (-38.0)
79830
82480
-150330
120590
570
84270

(21.9)
(22.8)
(-74.2)
(5.7)
(2.9)
(10.7)

(9.6)
(10.5)
(9.5)
(11.0)
(6.7)
(4.7)
(4.8)
(8.7)
(9.1)

(9.8)
(10.0)
(12.7)
(10.7)
(8.0)

181250
-6640
187890
2550
-11390
135840
135790
124180
101740

1127560 (13.4)

68940 (4.1)
-81800 (-16.3)
-2200 (-14.2)
235460
234880
-259380
55190
0
46330

(55.4)
(55.3)
(-85.2)
(2.3)
(0.0)
(4.9)

Variation
Financial Year So Far
201617

(2.1)
(-0.8)
(2.4)
(4.8)
(-3.1)
(5.5)
(5.5)
(1.9)
(1.6)

226500
-18750
245250
4610
-1350
126870
126920
-10940
-2490

(2.4)
(-2.1)
(2.9)
(8.0)
(-0.3)
(4.8)
(4.8)
(-0.2)
(-0.0)

201516
Trough
Peak

24674
7656
3193
7546
-

22952
7051
2938
6971
-

147240 (11.3)
35860 (8.3)
12620 (643.9)

215160 (14.9)
36270 (7.8)
870 (6.0)

108120
107150
14070
244460
2000
150810

-334170
-336610
145020
324760
2090
-58050

60470
63520
102040
256200
2480
168900

955110
51620
903480
5380
34080
206720
207540
733640
731610

(18.3)
(18.1)
(32.4)
(15.7)
(13.0)
(21.8)

22386
6707
2681
6704
149745

(-47.8)
(-48.2)
(0.0)
(18.0)
(12.1)
(-6.9)

Financial Year
201415

(14.1)
(7.8)
(14.8)
(13.3)
(12.1)
(10.3)
(10.4)
(13.9)
(14.2)

827730
80110
747620
7480
56730
279000
278560
542320
546350

(10.7)
(11.2)
(10.7)
(16.3)
(17.9)
(12.6)
(12.6)
(9.0)
(9.3)

End of Financial Year


201415

201314

29044
8980
3691
8834
-

1104180 (10.5)

110090 (9.2)
109020 (34.0)
-1280 (-39.5)

201314

Financial Year So Far


Trough
Peak

27145
8486
3539
8328
-

1032780 (10.9)

201516

(5.5)
(-0.6)
(2.3)
(-28.8)

Year
Ago

28021
8552
3536
8453
168483

Variation
Financial Year So Far
201617

251570
16769

76260
-5260
193020
-4200

Over Year

839250
82850
756400
6140
24410
124720
125310
578080
598130

82800
-485

(14.8)
(9.4)
(9.5)
(28.5)

201516

9553790
870240
8683550
62040
386090
2752380
2750850
7238680
7141870

108086
-14361

Financial Year
201314

261320 (2.2)

Scheduled Commercial Banks Indicators ( ` crore)


Outstanding
2016

201213

259820 (2.5)

234980 (15.7)
31660 (8.2)
4210 (46.6)
216100
215920
-7010
190800
1910
130960

55560
835

201112

(18.8)
(18.1)
(17.2)
(18.0)
(9.9)

27957
8607
3538
8491
168116

(24.9)
(28.3)
(31.9)
(26.7)
(12.3)

(16.6)
(17.6)
(0.0)
(12.0)
(12.8)
(21.5)

201516

794000
94960
699040
4080
14370
133690
134180
713200
702360

(9.3)
(12.0)
(9.0)
(7.6)
(3.9)
(5.4)
(5.4)
(10.9)
(10.9)

201516

25342
7835
3259
7738
166107

(-9.4)
(-9.0)
(-7.9)
(-8.9)
(-1.2)

* = Cumulative total since November 1992 until period end | Figures in brackets are percentage variations over the specified or over the comparable period of the previous year | (-) = not relevant | - = not available | NS = new series | PE = provisional estimates
Comprehensive current economic statistics with regular weekly updates are available at: http://www.epwrf.in/currentstat.aspx.

62

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are: Theoretical Perspectives on gender and labour research across
various disciplines; to understand the various feminist methodologies
and approaches in gender research; identifying emerging issues in
gender and labour research in social sciences; introducing them to
various qualitative and quantitative techniques in gender issues in labour
research; to make them familiar with recent statistical packages used
in social science research. Each of the selected participants would be
required to make a brief presentation of a proposal/research paper or
a case study, related to their current theme of research interest, during
the training period. No programme fee will be charged and VVGNLI
will provide to and fro second class sleeper train fare and free boarding
and lodging on twin sharing basis at the institutes campus.
Application along with the bio-data and a brief statement of the
participants research interests in gender issues may be sent to
Dr. Ellina Samantroy, Associate Fellow, V.V. Giri National Labour
Institute, Sector-24, Noida-201301, (0120-2411533-35, Ext. 223),
Fax: 0120-2411471, 2411536) Email: ellinasamantroy@gmail.com
Applications must be accompanied by no objection certificates/
recommendations of employers/research supervisors. The last date
for receiving the applications is September 01, 2016. Programme
details are also available on our website: vvgnli.org

65

ADVERTISEMENTS

APPOINTMENTS/PROGRAMMES/ANNOUNCEMENTS

Call for Papers

NATIONAL CONFERENCE ON
Development, Dispossession and Resistance
14-15 November 2016
Organised by
Department of Humanities & Social Sciences,
National Institute of Technology Rourkela, Odisha
For details visit: http://nitrkl.ac.in/Events_Happenings/5Conference/Default.aspx
Contact: Dr. Nihar Ranjan Mishra / Dr. Sthitapragyan Ray
Phone:

+91-661 2462691/2695/2795, Mob: +91 9437462037

Email:

niharhcu@gmail.com
raysp@nitrkl.ac.in

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Department of Sociology
University of Hyderabad

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Abstracts (500 words) are invited for a


workshop on Domestic Water Supply
and Governance in India to be organized
by Department of Sociology, University
of Hyderabad in collaboration with India
O b s er vator y, Lo n d o n S c h o o l of
Economics & Political Science (LSE),
London during August 12 13, 2016;
under the UGC-UKIERI Programme. The
workshop aims to deliberate on availability
and differential access to water for
domestic usage, and to examine the role
of institutional arrangements for equitable
and efficient governance of water service
delivery in urban and rural contexts.
Travel and accommodation will be borne
by the organizer.
Themes of Workshop:

Policy context and the institutional


changes in domestic water supply
in India

Water Availability, Access and


Water Service Delivery in Urban
and Rural India

Water Scarcity/insecurity and


Unequal Access to Water

Domestic Water supply Governance


and Institutional Efficiency in Water
Service Delivery

Abstracts should reach Dr. Satyapriya


Rout, Dept of Sociology, University of
Hyderabad by 20th July, 2016 at
e m a i l : s p r s s@u o h y d . e r n e t . i n
Phone: 0 - 9177982487

66

july 9, 2016

vol lI no 28

EPW

Economic & Political Weekly