Agriculture is important and so are jobs for those leaving agriculture
Why FPO/ private sector is better than govt
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Agriculture creates intrinsic wealth. It provides raw materials and new consumption for industry. There are many problems, not least the industry doesn't fully utilize the advantage of home grown cotton to win a bigger share of global textile market. A fix at textile level will help all round. Secondly, there is a lot of under-employed people in rural areas and rural areas haven't had enough spent in its infra. Govts at state and centre levels are responsible for all these people.
Thirdly, govt has favoured urban consumers. It has put so many hurdles for farmers, looking to diversify as it wants farmers to just produce surpluses at low cost for urban populations. Now, India is producing surpluses (soon to include pulses) and will produce more in near future with help of new technologies (eg. micro-irrigation, multi-cropping, SHC, mechanisation, greater use of hybrids, lower waste). If govt can come out of its paranoia over shortages, farmers will diversify. To diversify, farmers need a good market. Indian govt is promising this with MSP, FPO/private sector and exports.
Fourthly, failure in govt can be seen in seed companies. Govt seed companies don't make horticulture seeds and hybrids!! Earlier problem with urea. It has been slow in getting farmers to improve yields. It has not been able to develop irrigation. It has not built cold storage, fast logistics and food processing to tackle seasonal surpluses. It has failed to tackle crop buring. Farmers don't get good enough incomes, even when Indian farmers are fairly low cost producers.
To deal with surpluses, farmers need to produce more than cereal crops, eg. cash crops, timber, biofuels, solar energy, horticulture, animal husbandry & fodder, aquaculture & mariculture, silk, honey, edible oil if possible. With diversification, agricultural output is much higher and farmers produce more of what is needed. Farmer will go for higher productivity methods to ramp up production, knowing they will not lose out due to surpluses. Thus the idea below:
FPO and private sector are a great combination. Big companies can add post-harvesting & marketing infra, help in yields or lower costs, and give farmers higher share of the retail price. This can happen because there is considerable upside in yields, cutting middleman, etc. Farmers should resolve to grow right crops & use right technologies. In this situation, govt should help with irrigation, agricultural reforms, trade policies, scientific research, rural infrastructure, basic income/ subsidies, etc.
Jobs, Jobs and Jobs
------------------------------
While farm anger is ostensibly about low product prices, agitations by various landed castes has been about lack of jobs outside agriculture, and their demand for job reservations for which they are not entitled.
Logically, labour law reforms should have been a priority, but since no political consensus on this is possible, FM is subsidising job creation: Government will contribute 12% of wages for all new employees enrolled into EPFO for three years. Women employees' contribution to EPFO will be 8% which is 4% lower. Fixed term employment scheme, available to apparel and footwear industries, is being extended to all industries. These incentives could be huge spurs to job creation and formalisation.
Govt estimates it will generate 5m new jobs each year (or half of 10m new entrants), through EPFO & earlier jobs program, social schemes and infra projects‼ These don't include jobs from fixed term scheme, health, education, tourism, MSME, MUDRA, farm sector and MII.
Focus has been put on higher employment elasticity sectors like infrastructure, education, health, tourism and housing.Bold health plan will set up 150,000 primary health clinics in rural areas, and cover 100m poor families (or 500m people) for Rs5 lakh hospital expense!! This will create jobs in insurance, health infra and health professionals. Infra spending next year will be around Rs 6 lakh cr, compared to Rs 4.94 lakh cr before!!
Corporate tax rationalisation has an indirect impact on jobs as the proposed 25% tax band applies to MSME (turnovers upto Rs 250cr), which creates most of the jobs.
Budget promises to raise farmer's incomes via increasing MSPs this Kharif. This is unlikely to be substantial. It plans to cut back on middle men, and wants to link all APMC by March 2018. But with states reluctant, this is difficult. Instead budget is supporting FPO by giving full tax relief on profits for 5 years. FPO will help realise better prices for farmers. It is also developing 22,000 rural haats for open marketing purposes.
Political considerations
BJP could not go for middle class or big corporate tax cuts, or higher defence spending without dealing with farming distress and angst of under-employed youth who want to leave agriculture. Both these problems will take time, but Govt has made a very good start in this budget. Frankly both industry and agriculture are messed up. Govt has good ideas on agriculture — it needs time. Jobs are difficult without labour market reforms. Next best thing is to incentivise jobs creation, etc (see article). Also why not go full throttle for housing, rural infra, etc. Bold health plan is a very good move, to get votes from women and poor generally. It is also the right time to fix education and research & development.
❦ "6 cr households fall below the poverty line only because they are not able to pay for their medical expenses" ❦ —most are from rural and poor households.
Why FPO/ private sector is better than govt
Agriculture creates intrinsic wealth. It provides raw materials and new consumption for industry. There are many problems, not least the industry doesn't fully utilize the advantage of home grown cotton to win a bigger share of global textile market. A fix at textile level will help all round. Secondly, there is a lot of under-employed people in rural areas and rural areas haven't had enough spent in its infra. Govts at state and centre levels are responsible for all these people.
Thirdly, govt has favoured urban consumers. It has put so many hurdles for farmers, looking to diversify as it wants farmers to just produce surpluses at low cost for urban populations. Now, India is producing surpluses (soon to include pulses) and will produce more in near future with help of new technologies (eg. micro-irrigation, multi-cropping, SHC, mechanisation, greater use of hybrids, lower waste). If govt can come out of its paranoia over shortages, farmers will diversify. To diversify, farmers need a good market. Indian govt is promising this with MSP, FPO/private sector and exports.
Fourthly, failure in govt can be seen in seed companies. Govt seed companies don't make horticulture seeds and hybrids!! Earlier problem with urea. It has been slow in getting farmers to improve yields. It has not been able to develop irrigation. It has not built cold storage, fast logistics and food processing to tackle seasonal surpluses. It has failed to tackle crop buring. Farmers don't get good enough incomes, even when Indian farmers are fairly low cost producers.
To deal with surpluses, farmers need to produce more than cereal crops, eg. cash crops, timber, biofuels, solar energy, horticulture, animal husbandry & fodder, aquaculture & mariculture, silk, honey, edible oil if possible. With diversification, agricultural output is much higher and farmers produce more of what is needed. Farmer will go for higher productivity methods to ramp up production, knowing they will not lose out due to surpluses. Thus the idea below:
FPO and private sector are a great combination. Big companies can add post-harvesting & marketing infra, help in yields or lower costs, and give farmers higher share of the retail price. This can happen because there is considerable upside in yields, cutting middleman, etc. Farmers should resolve to grow right crops & use right technologies. In this situation, govt should help with irrigation, agricultural reforms, trade policies, scientific research, rural infrastructure, basic income/ subsidies, etc.
Jobs, Jobs and Jobs
While farm anger is ostensibly about low product prices, agitations by various landed castes has been about lack of jobs outside agriculture, and their demand for job reservations for which they are not entitled.
Logically, labour law reforms should have been a priority, but since no political consensus on this is possible, FM is subsidising job creation: Government will contribute 12% of wages for all new employees enrolled into EPFO for three years. Women employees' contribution to EPFO will be 8% which is 4% lower. Fixed term employment scheme, available to apparel and footwear industries, is being extended to all industries. These incentives could be huge spurs to job creation and formalisation.
Govt estimates it will generate 5m new jobs each year (or half of 10m new entrants), through EPFO & earlier jobs program, social schemes and infra projects‼ These don't include jobs from fixed term scheme, health, education, tourism, MSME, MUDRA, farm sector and MII.
Focus has been put on higher employment elasticity sectors like infrastructure, education, health, tourism and housing.Bold health plan will set up 150,000 primary health clinics in rural areas, and cover 100m poor families (or 500m people) for Rs5 lakh hospital expense!! This will create jobs in insurance, health infra and health professionals. Infra spending next year will be around Rs 6 lakh cr, compared to Rs 4.94 lakh cr before!!
Corporate tax rationalisation has an indirect impact on jobs as the proposed 25% tax band applies to MSME (turnovers upto Rs 250cr), which creates most of the jobs.
Budget promises to raise farmer's incomes via increasing MSPs this Kharif. This is unlikely to be substantial. It plans to cut back on middle men, and wants to link all APMC by March 2018. But with states reluctant, this is difficult. Instead budget is supporting FPO by giving full tax relief on profits for 5 years. FPO will help realise better prices for farmers. It is also developing 22,000 rural haats for open marketing purposes.
Political considerations
BJP could not go for middle class or big corporate tax cuts, or higher defence spending without dealing with farming distress and angst of under-employed youth who want to leave agriculture. Both these problems will take time, but Govt has made a very good start in this budget. Frankly both industry and agriculture are messed up. Govt has good ideas on agriculture — it needs time. Jobs are difficult without labour market reforms. Next best thing is to incentivise jobs creation, etc (see article). Also why not go full throttle for housing, rural infra, etc. Bold health plan is a very good move, to get votes from women and poor generally. It is also the right time to fix education and research & development.
❦ "6 cr households fall below the poverty line only because they are not able to pay for their medical expenses" ❦ —most are from rural and poor households.
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- Budget contains a Rs 1,40,000cr scheme to solarise agri-pumps and set up solar plants on barren land. Govt will pay Rs 48,000cr into the Kusum scheme over 10 years.
1. New 10,000-mw solar plants on barren lands
2 Discoms to buy power from 17.5 lakh solar pumps (subsidy given)
3. Solarising pumps of 7250& 8250MW
▬ Govt pumps for shifting water also included
4. New solar pumps will get 60% direct subsidy, 10% farmer's upfront cost and 30% by bank loans.
▬ Farmers can set up twice their pump's KW. and make a tidy profit.
▬ ISA is aggregating solar pumps requirement to get best prices
♦ Kusum will reduce discom losses, and help balance the grid (as pumps demand is flexible)
♦ Saubhagya scheme and Kusum will help reduce diesel imports. Saubhagya replaces diesel in homes, and Kusum in fields, as 3rd of 30m pumps are diesel fired.
REPLY Feb 4, 2018 - Infra and social welfare projects of Govt will generate 5m jobs (or more) each year, enough to absorb half of 10 million people who annually enter the country's workforce!!
↓
☻ Jobs schemes 3.29m jobs
○ 0.294m jobs under MSME jobs scheme
○ 3.0m (est) jobs under PM Rajdar Protsahan Y
(govt pays 12% employer's contribution)
☻ Roads & railways 76,000 jobs
○ 142m mh in Bharatmala
○ 50m mh in railways
☻ Post-harvest 0.17m jobs
○ 0.095+m jobs in Mega Food Parks
○ 0.075m jobs in cold chains + agri infra
☻ Rural infrastructure 1.3m jobs
○ 170m mh for 2 crore toilets
○ 465m mh for 5.1m houses
○ 285m mh for rural roads
○ 2300m mh under MGNREGA
(mh=manhours, job =2500mh / pa)
Non-quantified other jobs from govt effort
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Fixed term contract scheme will create formal jobs. Employers will be encouraged to take on more people as cost of failure is reduced. Trade unions are opposed. Efforts in farming, health, tourism, education, MSME & MUDRA (to disburse Rs3 lakh cr) will create formal and informal jobs.
REPLY Feb 4, 2018 - Long neglected North East thanks govt
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NE lost access to markets and sea ports; its vital trade links also got snapped. Connectivity is important as militancy in NE stems from ensuing economic strife. PM Modi put a sharp focus on NE and called it, ‘Act East Policy’. Flurry of mega infrastructure projects – roads, bridges, tunnels, railway lines, construction of new airports and heliports and expansion of existing ones – as well as hydro power, housing and other projects have followed.
“Successive Congress governments have paid zero attention to road, rail and air connectivity and for its economic development. Within a few years, the economy of this region will take off, thanks to work done over the last few years,” assured Assam CM Sarbananda Sonowal.
“Enhanced links to India & SE Asia are game changers. Budget is a boon in this regard. Connectivity is unlocking the NE — investments, once just a pipe dream, have started trickling in. We expect it to turn to FLOW within 2 years,” said Arunachal Chief Minister Pema Khandu.
Budget & development
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Total allocation for NE receives a significant increase of Rs 7,023cr from Rs 40,971cr. with DoNER up 11% to Rs 3060cr
▬ Completion of ongoing power projects 1292cr
▬ Capital outlay for power 267cr
▬ Solar power 234cr last 2 years
▬ Hydro esp Sikkim & Arunachal 54000cr has ALREADY been invested
▬ Airports, helo & ALG infra 815cr
▬ UDAN vgf 200cr (tourism, trade & commerce. expect results in 2019)
▬ 20 major railways projects
3 new rail lines to extend railways to Indo-Tibet border (Arunachal). From 5900cr already committed, the figure could rise to 40,000cr with Japan/ PP investments
▬ 10,500 km of new roads done. Program to spend Rs 2 lakh crore from 2014 till 2019 (incl bridges, tunnels, etc) including:
○ 800km Brahmaputra Express at 40,000cr
○ Trans-Arunachal highway at 55000cr
○ Strategic tunnels to LAC (Sela pass to Tiwang)
▬ NE's food processing will get a lift from the budget (v. important for NE). Possibly organic foods.
▬ National Bamboo Mission (NBM) 1290cr
○ Though NE has 25% of India's forest cover (mostly bamboo) there has not been a concerted effort to commercialise bamboo.
○ NBM can support range of bamboo-based industries like food processing and construction. Most of NE is intimately linked to bamboo. NE traditionally uses bamboo in every stages of life.
○ "The Budget has one of the best initiatives to promote holistic development. NBM now needs to focus on value-chain management and value-addition of bamboo at community level so it raise more incomes locally." "Its a farmer friendly move — it will benefit bamboo farmers and artisans (eg furniture makers)"
○ Bamboo is being shipped to refineries to earn revenue for states.
http://www.thehindu.com/news/national/budget-brings-hope-to-bamboo-rich-northeast/article22623985.ece
REPLY 32w - Feb 2, 2018
- This budget is closest to govt's proclamation that it is dedicated to poor, backwards and women. Most schemes don't seem relevant to urban middle class and urban upper castes males.
Human capital
○ Modicare NHPS - poorest 100m families
○ Wellness clinics - mother + child (pt of 1.5 lakh)
○ Health centres - unserved rural (pt of 1.5 lakh)
○ Ujjwala scheme - poor women (8cr families)
○ RISE - Revitalizing Infra in School Edu. (govt schools, bright students)
○ Ekalavya residential schools - tribals (each block)
○ Phd research scholarship - 1000 pa
Jobs and farming sector
○ 'Living wage' MSP - all farmers
○ Agri-market & Agri value chain - farmers (rising numbers)
○ MUDRA - aspiring class
○ MSME corporate tax- labour intensive sectors
○ Stand-up India - women, backwards
Infrastructure
○ Bharatnet ph 1 - rural (1lakh GP)
○ Bharatnet ph 2 - rural (remaining 1.5lakh GP)
○ Rural infra incl village roads - rural
○ Saubhagya - neglected rural (4cr families)
REPLY Feb 5, 2018 - Experience of large scale States and Centre programs suggests NHPS will cost around Rs10,000cr +/- 20%. When based on guesswork or individual family cover, the figure is 10 times more!! Which is likely to be correct?
▬Guess-estimates are absurd. Estimates based on family cover miss benefits of risk pooling, scaling and administration.
✔ TN, Rajasthan and Kerala have successfully implemented insurance schemes with premiums of as low as Rs 350 per year and cover of Rs 2 lakh per family of five!! Based on say Rs1000 pa for NHPC, the total cost is Rs 10,000cr
✔ "Tamil Nadu allocates Rs 800 cr for 5cr. So a bare minimum may be Rs 8000cr. Clearly govt has given a token allocation for next year.
✔ Govt's own scheme: costs Rs 750cr for Rs 30,000 expenses cover. Don't know about the population covered, but again Rs 8000cr seems realistic (ie x11 more).
✖ IMA president says govt will require 10000cr or more.
✖ if 5% of beneficiaries claim half the amount (unlikely), figure of $20B
✖Oriental Health Insurance quoted Rs14000+ tax for family of 2 adults + 1 child. This would mean 14000*10cr = 140,000cr
REPLY Feb 5, 2018 - Govt wants to complete projects ASAP and show results. It is committing to mainly ongoing infra projects, though it has expanded scope in rural, education, health, tourism areas. Most infra and new rural projects wont show benefits before general election.
Infra: Bharatmala, Railways, Sagarmala, airports, etc
------------------------------------------
◘ Budget gives a whooping Rs 6 lakh cr (up 21%)
— fiscal target relaxed to 3.3% from 3%, divestment, capital gains and high growth of direct tax
◘ Off-budget finance plays a big role
—tax-free infra bonds, asset recycling, multilateral agencies, domestic institutions, infra invest. trust & RE invest. trust
—Private sector nudged towards bond market
Rural & livelihood infra (Rs14.3lakh cr, Rs12lakh cr from off-budget)
---------------------------------
◘ Speed up completion: toilets, village electrification, rural roads program and Bharatnet phase 2 (incl 500,000 rural Wifi).
◘ Expansion of old projects: household power connections (4cr, complete in just 12mo!), village rural roads (0.32m km, connect markets, school, health centre, etc.), LPG connections to 8cr (up from 5cr)
◘ Big ticket & major thrust : affordable housing (5.1m) and solar pumps & parks.
◘ Bigger impact: fisheries and animal husbandry (Rs10,000cr), micro-irrigation, food parks, agro-processing & food processing centres
◘ New : 22,000 rural haats (open market, for direct selling to major buyers), 585 mandis (exchanging goods)
◘ Livelihood and job creation: health & wellness centres (1.5lakh), 24 new teaching hospitals by upgrading district hospitals, district training centres, Ekalavya residential schools (each tribal block)
Others
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◘ 99 Smart cities ~Rs 2lakh cr and 10% contracted. A few green cities coming up along DMIC and major ports
◘ Drinking & tapped water for all in 500 cities
◘ Tourist sites (develop 10 major sites, upgrade 100 Adarsh monuments)
◘ Defence corridor (for public, private & MSME)
◘ 1cr PNG connections / city gas distribution esp S, E & NE
Piped gas connections
---------------------------------
Govt has been slow in adding PG (1.1m in 3yrs) so well short of target (3.9m out of 10m done). Concentration in Gujarat, Maha, Delhi persists, perhaps due to low uptake. CNG filling stations are expanding. GAIL will add 142 more cities in next 2 rounds of bidding!!
Expansion of gas pipe network is bringing gas to other states: UP from spur of W-E pipe. Urja Ganga pipe will bring gas from Odisha to East India (Jh, Ch, WB, Bh, UP). S India pipe will cover TN, Kar & Kerala. Pipe from Assam fields can cover NE.
Hydropower
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"NHPC projects in HP & JK are expected to be commissioned in early 2018. These will add 4.46B units."
REPLY Feb 5, 2018 - Infra allocation has skyrocketed from Rs 1.8T to Rs 6T in 4yrs. Govt will need off-budget means to meet total requirement of Rs50 lakh cr ($790B), and is using new funding mechanisms. eg. Infra invest. trust can monetise PSUs assets, corporate bond market is being developed by mandating use of bond finance. Two infrastructure projects require Rs18T (Bharatmala & Sagarmala). 2018/19 funding for: railways, roads & airports authority are Rs1.48T, Rs1.21T, ~Rs5000cr
Targets and policy thrust
-- 41 km/day roads for next year
-- 5-fold capacity increase or 1cr passenger flights by 10 yr
-- 3-fold increase in rail freight capacity by 2030
○ customer friendly tolls eg. "pay as you travel"
○ open unserved airports+ helipads & ramp up UDAN flights
○ state-of-art railway signalling
○ seaplane infra
○ skim-clean Ganga water, start Ganga & Brahmaputra/ Barak waterways
REPLY Feb 4, 2018 - RISE : revitalisation of infra and systems in education
RISE scheme given Rs 1lakh cr over 4yrs
▬ Revitalise school infra
▬ 24 medical colleges (in situ district hospitals) across country (spread evenly as 1:3 of 543 constituencies)
○ District hospitals better than AIIMS
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AIIMS represents the best in medical education, treatment and care. Delhi AIIMS treats 10000 patients, many from neighbouring states. Govt has sanctioned 14 new AIIMS since 2013-14 to decongest. These AIIMS are struggling to fill teaching and non-teaching staff. Upgrading district hospitals sited close to needy people, is great as they are amenable to rapid facilities & capacity building. It gives local doctors opportunity to specialise and this helps to fill staffing requirements.
○ Aside: GOBAR-DHAN scheme
-----------------------------------------
Organic waste that causes sickness, malnutrition, etc will be converted to compost, fertiliser, bio-gas and bio-CNG. Collected toilet muck can be processed as well.
https://www.hindustantimes.com/columns/upgrading-district-hospitals-better-than-new-aiims/story-Z3c7Aj0wr0vtzN2A4i2HfN.html
▬ Tribal residential schools: in blocks with 20,000 ST & 50% total pop
▬ Rail university at Vodadara
▬ 18 new pre-schools for IITs and NITs
▬ 1000 pa fellowships to IIT & IISc, for bright BTech students
▬ Digital & technology drive in classrooms
▬ Teacher training programme
○ Integrated B.Ed
○ Diksha portal to digitally upgrade teacher skills
○ Pre-service training & in-service learning
Last year's Budget
♦ New IITs — 3000cr
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6 new IITs will come up in temporary premises at Rs 7000cr over 3yrs. Land has already been procured. States are cooperating. A further Rs13,000 cr will be spent on establishing permanent status for IITs.
http://www.livemint.com/Education/HnGNUSlnYs30rOsN1Dm7tN/Centre-may-spend-over-Rs20000-crore-on-six-new-IITs.html
♦ 20 world-class varsities — 10,000cr
♦ 2 new AIIMS in Jh & Gj
♦ IIM Bill in 2017
“IIMs selected on accreditation and ranking, will be given autonomous status. Greater freedom in administrative and academic choices should improve quality."
REPLY Feb 5, 2018 - Budget -- Rs 15,000cr health education scheme:
○ 24 new medical colleges (attached to district hospitals) in unreserved areas, by 2021-22 (3 years)
○ 248 nursing/ midwifery schools
○ 10,000 MBBS and 8,000 PG seats will be added
○ Upgrading of PG teaching facilities and district medical faculties
It will ensure equitable spread of medical colleges, use of existing infra, higher doctor-patient ratio and promotion of tertiary care in government sector. It is likely to reduce the cost of medical education. States will identify blocks where it has the greatest challenges in filling medical vacancies, as medical colleges will mitigate local staff shortages.
REPLY Feb 15, 2018 - “Families spend their own money for medical treatment and as a result 6 crore families become BPL. Centre is not concerned about funding an insurance cover. National Health Protection Scheme (NHPS) is a priority for government and will be rolled out very soon. Centre will tap the best technology available for ensuring transparency and plugging leakages. Infrastructure in government hospitals will be strengthened first, and strategic participation will happen after this, but on Centre's terms", said JP Nadda health minister.
☻ Reduce out of pocket expense for 2ry+ care
▬ academic research & models were studied for a sustainable solution
▬ finer details & implementation makes schemes successful
▬ NHCP is just an expansion of Centre's role, as Centre is active in TB, HIV, dialysis, AIIMS
☻ Look at best practices from states and others, be it trust or insurance model
▬ separate body will run NHCP on mission mode
▬ subsume or synchronise with state programmes—choice of implementation will be left to states
▬ benefits must reach the masses eg. use technology for transparency, stopping leakages
☻ Add and improve infrastructure in government sector
▬ new hospitals will come up
▬ medical facilities will be graded
▬ district medical colleges will obviate staff shortages, especially at primary care level
☻ Devise uniform regulations for life-saving procedures, layers of grading and to empanel hospitals.
▬ safeguard and monitor the role of private hospitals
▬ input costs will be regulated for the poorest person
https://economictimes.indiatimes.com/news/politics-and-nation/national-health-insurance-scheme-to-be-tech-driven-health-minister-jp-nadda/articleshow/62826722.cms
REPLY Feb 16, 2018 - NITI Aayog vice chairman Rajiv Kumar on:
♦ Underemployment and unsatisfactory jobs
------------------------------------------------------------
"I don't think that we are suffering from unemployment. Rather it is underemployment or unsatisfactory employment that we are facing. Young people are not satisfied— their aspirations are running miles ahead of ground reality. On one hand is the need for employment generation and then there is the emergence of automation, robotisation, artificial intelligence, etc.
"India is transitioning in a very turbulent time, so we have to find very clever ways of handling this. Cut-paste model from abroad or any other variety will not work. We should work together with industry to handle this". Government has shifted attention to apprenticeships, which will meet aspirations of young people for engaging jobs, as well as produce employable trained workforce for tomorrow.
♦ Farmers welfare
------------------------
Under MSP scheme farmers are slated to get 50 per cent more on their production cost. Kumar said meeting with state governments will be held from February 15-20 to look into the modalities of how it has to work.
"MSP will not be as effective without proper procurement, and so government wants to authorise states to do procurement, which currently is done by Centre. For agro-processing we need good logistics from farm gate to markets.We are also looking to bring agro-processing units closer to farm gates, I think the capacity utilisation can then be much better. Also credit issues of agro-processing industry need more attention".
REPLY Feb 16, 2018 - Every doctor will tell you that treating symptom rather than the disease is very bad for patients. The diagnosis of whether India has a jobs problem or a wages problem is an important one for budgets because if you think it is jobs, then you will junk fiscal discipline and pump up spending; this thinking converted India from a high-growth, low-inflation economy in 2004 to a low-growth, high-inflation economy in 2014. The latest budget has a clear philosophy; India’s problem is not jobs, but formal jobs. And formal jobs need the productivity that comes with lower regulatory cholesterol, and infrastructure, human capital and fiscal discipline.
The moves on lower regulatory cholesterol are broad and deep for formal employers; lower income tax for all but the biggest companies, replacing the massive paperwork of travel and medical reimbursements with a standard Rs40,000 deduction for employees, rationalizing the tax structure for bankruptcy cases and bidders, fixed-term contracts for all industries, continuing the shift in the tax regime from one that offers subsidies for investing capital to one that rewards hiring people (80JJA). But the biggest innovation of the budget is an area that breeds informal employment; tweaks to the provident fund scheme that will reduce the gap between advertised and take-home salary. The government subsidy for the employer’s 12% provident fund contribution and the lower 8% employee contribution for women are important steps in overhauling labour laws to reduce the cost of formality. Another important part of the infrastructure for entrepreneurship was the announcement of an Aadhaar-like number for enterprises. Currently most enterprises have more than 20 numbers issued by different parts of the government with consequent corruption and harassment in licensing, challans, returns, inspections, and so on. Having a unique enterprise number for enterprises is enabling infrastructure for a government-wide adoption of the India Stack; paperless, presenceless, and cashless. The e-assessment proposal for income tax is not only the first move towards paperless, cashless and presenceless but is a solid intervention in preventing companies and chartered accountants being ATM machines for tax authorities.
The National Health Protection Scheme, covering 500 million people, addresses one of the biggest reasons for people falling back into poverty. The proposal for a massive increase in medical colleges is overdue and welcome; India only produces 50,000 doctors but 1.4 million engineers a year and consequently medical education has not seen the competition, lower fees and volumes that India needs. The mention of learning outcomes is a huge move away from the obsession with inputs, but I wish there had been something more specific about revamping the current regulators in education who confuse school buildings with building schools. The proposal to invest Rs1 trillion in infrastructure and research is a good idea but we must remember you don’t repair leaky pipes by turning up the water pressure; ideally the budget would have announced this investment with the radical step of separating the regulator, policymaker and service provider in education.
Over the last few years, India’s Buy More Tunnel Club (BMTC)—every time there is light at the end of the tunnel, they go out and buy more tunnels—has focused on the very real short-term pain of structural interventions. But while they privately agreed about long-term desirability, BMTC did not believe that the goods and services tax, demonetization, bankruptcy code, real estate regulation act, shell company hunt and so on would start reinforcing each other so quickly; a 20% increase in individual taxpayers, a 50% increase in indirect tax registered enterprises, and a reduction of informal employment to 75%. Rabindranath Tagore once said that life should not be the infinite elongation of a straight line; Indians are finally starting to lose our sense of humour about the rule of law, dropping our risk-less view of cash, and feeling the macroeconomic stability that is here to stay. This budget moves that process along.
REPLY Feb 15, 2018 - All the water in the world cannot fill a bucket with a hole in it. The finance minister has to allocate funds to train experts in artificial intelligence (AI) while also providing for fifth graders. We need to fix the basics, as much as we need our moon shots. This juxtaposition is no longer surprising, it is the norm for India. Nevertheless, our ambition should not be tempered by our reality. As long as the road ahead is, we should appreciate we’ve already come quite far!
India has made remarkable progress with regard to financial inclusion. In the last three years, we have added more than 310 million accounts, owing to the adoption of electronic know-your-customer (eKYC), which enables a bank account to be opened in five minutes using Aadhaar. An average Indian can now transact between different bank accounts using any bank’s app in mere seconds because of the Unified Payment Interface (UPI)—a state-of-the-art payment platform developed by the National Payment Corp. of India. UPI does upwards of 150 million transactions a month, a number significantly higher than that of credit card transactions for the same period. We have only been able to achieve this because of a timely investment in the creation of digital infrastructure like the India Stack as a public good.
The finance minister’s opening remarks laid emphasis on this government’s focus on structural reforms. We cannot deal with our diverse and complex problems without focusing on fixing the basics and investing in infrastructure. But the definition of the word infrastructure needs to expand. In the digital age, infrastructure no longer means just roads, bridges and highways but also platforms, software development kits (SDKs) and application programming interfaces (APIs). The government’s role isn’t to prescribe cookie-cutter solutions for all our problems from Delhi, but instead to enable grassroots innovators to co-create their own solutions, which fit their context.
This can be called the societal platform approach of solving India’s hard problems. Sarkar (government) alone cannot fix our problems, it can only help create the right conditions for samaaj (civil society), sarkar and bazaar (market players) to co-create context-aware solutions. I am glad to see this year’s budget underlining this approach. Announcements such as creating 500,000 Wi-Fi hotspots, which will provide broadband access to 50 million rural citizens, will pay off in ways we cannot even imagine today. Similarly, we will see tremendous benefits of the formalization of toll collection, through FasTag, an electronic platform using modern wireless technology, which can be applied to parking and congestion pricing as well.
The beauty of these platforms is that they are extendible. The second-order benefits take a lot less time to implement, and their benefits are felt much quicker. Now that we have basic financial inclusion, our ambition can move to financial resilience. For example, on the back of the financial access created by the Pradhan Mantri Jan Dhan Yojana, the budget announced a more ambitious target of bringing all 600 million basic accounts within its fold and undertaking measures to provide services of micro insurance and unorganized sector pension schemes through these accounts.
The finance minister also announced his intent to use data from the Goods and Services Tax Network (GSTN) to enable flow-based lending for micro, small and medium enterprises (MSMEs). The technology spine of GST Network allows us to imagine a system where even small businesses can get a quick loan, online without paperwork, on the basis of their tax data, which is provided at the invoice level. The Trade Receivables e-discounting System (TReDS) will get a big boost as suppliers can instantly discount their invoices which have been accepted by the buyer on GSTN. The move to an e-assessment system rather than relying on person-to-person interaction is also a big win for MSMEs across the country. The creation of an Aadhaar-like unique identification number for enterprises will help spread the benefits of these online platforms to the micro-entrepreneur as well. We’re probably going to be able to achieve this rapidly, because all the building blocks are already in place.
We’re seeing the government adopt the same approach for education. Combining cyber and physical systems as mentioned in the budget, is the right way forward. The Department of Science & Technology will launch a mission on Cyber Physical Systems to support establishment of centres of excellence. They are also investing in creating digital infrastructure such as Diksha—the national teacher platform. Healthcare too needs structural reform and digital infrastructure, if we are to successfully roll out the National Health Protection Scheme—the world’s largest government-funded healthcare initiative that will cover a majority of our vulnerable population.
The system is not perfect, but we must appreciate how much progress has already been made. We are beginning to develop an approach that works for our complex, varied problems. A budget for a country as large and diverse as India cannot assume to know the answers to all the problems. Yesterday, we heard the finance minister address everything from Hawai Chappals to Hawai Jahaaz. But the unifying theme is that they are investing in our basic infrastructure, both physical and digital
REPLY Feb 15, 2018 - The study that claimed 7 million people would be added to the payroll in 2017-18 was triggered by the Prime Minister’s Office (PMO), which had asked the NITI Aayog last October to give “quick indicators for direct or indirect reflections on employment data” to be able to arrive at “desired trends in employment at the earliest.”
The NITI Aayog, in turn, helped the authors of the study — Towards a Payroll Reporting in India to gain access to data of around 80 million Employees’ Provident Fund (EPF) subscribers. Since this database is not in the public domain, the Aayog acquired the data from the Employees’ Provident Fund Organisation’s (EPFO’s) national data centre office in Hyderabad and passed it on to the authors — Indian Institute of Management (IIM) Bangalore Professor Pulak Ghosh and State Bank of India (SBI) Chief Economist Soumya Kanti Ghosh — who arrived at their estimates on payroll addition based on that. The government’s think tank also allowed the authors to work from its offices.
This was perhaps the first time that the EPFO data on employees was made available to a select group of non-government researchers. Sources familiar with the developments say that even the EPFO was not fully aware that its employment data would be used by somebody outside the government system.
The study has been widely quoted by the Union government to battle criticism of jobless growth in the economy. Four days after the study by Ghosh and Ghosh was made public, Prime Minister Narendra Modi said in a televised interview that the data on 7 million jobs was a result of a study. While announcing the steps taken by the Centre to address the employment problem, Finance Minister Arun Jaitley said in his Union Budget 2018-19 speech earlier this month that “an study conducted recently has shown that 7 million formal jobs will be created this year”.
REPLY Feb 16, 2018
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