All posts by Avinash Kishore

The Tablet Populism

There is a new wave of populism in South Asia—of giving free laptops or tablets to students. Government of Punjab in Pakistan was probably the first to launch a scheme to gift free Dell laptops to 110,000 meritorious college students in the state. The new government of Uttar Pradesh in India went a step ahead and promised a laptop to all students who graduate from high school. Now, Kendriya Vidyalayas—schools run by Government of India for kids of its employees—has announced that students will get tablets from class IXth onwards to facilitate e-learning. It seems that more states and institutions in the region will follow in the footsteps of Pakistan Punjab and Uttar Pradesh. The promise fetches immediate media attention and nearly not as much criticism as other such hair-brained populist schemes do. IT companies feed this populism by initially subsidizing or even sponsoring student and teacher training, software development, and impact evaluation. The evaluation almost always shows large positive impacts and gets due media coverage. The politics and the industry are working together to take Indian students and classroom to a new era.

My choice of words clearly betrays my view of these new projects. Bridging the digital divide is desirable, but shouldn’t we focus on bridging the “digit divide” first in a region where every third student cannot subtract single-digit numbers (8 – 3), even after finishing four years of school (in Pakistan) and nearly half of them cannot subtract 112 from 640 (640 – 112) after five years of education (in India).

Proponents of free laptop schemes may argue that we should be doing both—bridging the digit and the digital divide—and that there is no trade-off. But there is a trade-off. India spends only 3.7% of its GDP on education and Pakistan only 2%. The challenge is overwhelming and resources scarce. Gifting free laptops to school and college students may not be the best use of scarce resources. We should use this money to hire teachers, build classrooms and toilets, and provide textbooks. Even if we want to leverage the power of IT and computers for better learning outcomes, there must be cheaper and better ways of doing it than giving away expensive free laptops.

A tussle for job cards

Two weeks ago I wrote how denying job cards seems to be one of the ways used to deny employment guarantee under NREGA. Legally, a job card has to be issued to anyone who applies for it within 15 days of application. It turns out that people are not all that entitled to their entitlements. It takes a lot of time, effort, organization, and struggle.

There is an interesting story in today’s The Hindu about women’s struggle in western UP (not far from where RICE is) to get job cards and other entitlements:

About 80,000 women of nine districts have been fighting and creating awareness to get their legal entitlements like right to food, right to work and right to health. Working under the banner of Nari Sangh, these women have succeeded in regularising almost 268 PDS shops in the past four years. It was not an easy task to get job cards, payment receipts and pass books under the right to work scheme, but collective efforts of the women has resulted in providing work to 45,000 families in 666 gram panchayats.

NREGA: Denying Job Cards to Deny Jobs

In the last post, we saw how more than half of all rural households (55%) who wanted to work under NREGA, did not get even a days work in year 2009-10. All these households are entitled to unemployment allowance under NREGA Act. Few ever get it. Instead, state governments fudge data to show that every household that demanded employment got at least some.

How do they do it?

The employment and unemployment survey (EUS) shows that nearly one-third (32%) of all households in rural India, who sought employment in NREGA, did not have a job-card. In Bihar, Maharashtra, and Haryana, more than two-thirds (68%) of households interested in working in NREGA did not have job-cards. In Karnataka (52%) and UP (47%) too, nearly half of all interested households did not have job cards.

You need to have the job-card to get work in NREGA just as you need the ration-card to get subsidized food from the public distribution system (PDS). 97% of people who wanted to work under NREGA, but did not have job-cards, did not get any work. Officials, however, find it harder to deny employment to those who have the job card. Among job-card owners, 81% got some employment if they demanded it. Even in a state like Bihar, where NREGA’s implementation is shoddier than in other states, 83% of interested households with job cards got at least some work. If we look at all households of Bihar, only 21% got employment if they demanded it. Nationally too, this fraction is only 45% as mentioned in the previous post. Thus, denying job-cards is the way to deny employment in NREGA and it also helps to fudge data.

NREGA: Corruption in Data

Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGA) is the largest anti-poverty program in India’s history and in the history of the developing world. Government of India allocated $8 billion (Rs. 400 billion) to NREGA in 2011-12–30% more than the World Bank’s total lending and assistance for all rural development programs across the world.

There has been a great emphasis on transparency, accountability and continuous monitoring in implementation of NREGA. The program has a dedicated website with regularly updated data down to the village level. I cannot think of any other government program in India with such rich, current, and readily available information. NREGA’s rich data would be a researcher’s dream—if only the data were any good.

I started exploring the NREGA website only about two-three weeks ago. I started with state-level summary reports on total employment demanded and created under NREGA. The reports tell us that most states of India have managed to provide employment to almost every household that asked for work in 2009-10 and 2010-11. This seemed too good to be true. But how do we verify it?

Fortunately, recent rounds of Employment and Unemployment Survey (EUS) of NSS ask some questions about participation in NREGA from all rural households in the sample. One of the questions is:

If any member of the household worked in NREGA in the last 365 days (1= yes; 2= sought work but did not get it; 3 = not interested in working in NREGA.

Responses to this question show that in 2009-10, only 45% of households that sought work under NREGA actually got any work. NREGA website shows this fraction to be more than 98%, with little inter-state variation. We see large inter-state variation in the extent of rationing of employment opportunity under NREGA in the EUS data. Rationing is high in Maharashtra (84.02%), Punjab (83.35%), Bihar (78.45%), and Haryana (73.79%) and low in Rajasthan (15.50%), TN (19%) and AP (25%).

The EUS data seems more reliable while the official NREGA data is complete fabrication. NREGA Act promises 100 days of work to every rural household that asks for it. If the government fails to provide work, it has to pay an unemployment wage to the person. While the federal government pays NREGA wage, paying unemployment wage is state government’s responsibility. State governments tamper data to save their money and the result is unreliable data and the accompanying loss of accountability.

Designers of NREGA would have hoped that making data easily accessible would prevent corruption. In reality, the data itself has been tampered—massively, blatantly, obviously.

Right to Education Act: India’s Brown vs. Board?

The Parliament of India passed a Right to Education (RTE) Act in 2009. One of the key provisions of this Act requires private schools to enroll at least 25% of their students from socially and economically backward groups and not charge them any fee. The state would compensate schools, at least partially, for teaching these students. Many private schools, and parents who send their kids to these schools, are unhappy with this provision of the RTE Act. Schools and parents dislike this forced social and class integration in classrooms.

Private schools in India can be discriminatory in ways that remind you of the American South in 1950s and 1960s. A top private school in Gandhinagar, Gujarat rescinded its admission offer to our maid’s son after they discovered that he lived in the servant’s quarter. My Aunt taught in a school in Delhi that had a separate shift of classes for poor kids to keep them away from their more privileged brethren. These kids got worse teachers and no access to school’s playground, swimming pool, or dining hall. The school even toyed with Newt Gingrich’s idea of hiring some of these poor kids as janitors during the main shift.

I was not surprised when a group of private schools challenged the constitutional validity of the Act in the Supreme Court of India. Last week, however, the Court not only rejected schools’ appeal, but also ordered them to ensure that at least one in four kids in every single classroom is from an underprivileged group. No separate shifts now! This is a momentous decision.

There are about 200 million kids in the 6-14 years age group in India. 95% of them are enrolled in schools. We do not have data on how many of these kids study in private schools. According to Pratham’s Annual Survey of Education Report (ASER 2010), one in four school going kids (26 percent boys and 22 percent girls) in rural India goes to a private school. In some states like Punjab, Haryana, Manipur, Meghalaya, and Kerala, the distribution of kids between government and private schools is almost even, while in Uttar Pradesh—the home state of RICE—43 percent boys and 35 percent girls study in private schools. The share is probably much higher in urban areas because there are more and better private schools in cities and parents have greater ability to pay the school fees. Even if we take the conservative estimate that 25 percent of all school going kids in India (in 6-14 years age group) are in private schools, it means that the 0.24 million private schools of India have a combined student strength of nearly 50 million. The RTE Act has created 12.5 million free seats in private schools for underprivileged kids—a huge opportunity and the number of free seats will only increase as more private schools come up.

I am excited and worried in equal measures. I am excited that many poor parents will now be able to send their kids to better schools. I am excited that the kids from well-off families will share classrooms with the poor. This, I hope, will make them more compassionate and more humane, and bring them closer to the reality of India.

On the other hand, I am worried that government schools will become even worse as they lose their best students (and most resourceful parents) to private schools. I am worried that private schools and state bureaucracies will make every effort to subvert the Act: there will be fake enrolments, poor treatment of the poor kids, and only half-hearted efforts to bring them up to the grade. I am worried that the Act provides for free education only till 14 years of age when most kids are in class 8th or 9th. What afterwards: Punah mushako bhava (back to square one)?

It will be interesting to keep track of the myriad changes–positive and negative–that will result from RTE.

‘Combined’ against Naxalism

A combine harvester, or combine, is a machine that harvests food crops like paddy, wheat, maize and soybean. It combines three separate operations, reaping, threshing and winnowing, into a single process. Combines are giant machines; bigger than anything you see on Indian roads, except maybe the big trucks and earthmovers. I saw them first in Bhabhua, Bihar in year 2004. I was in Bhabhua to understand why farmers in Bihar do not choose labor and water intensive crops that also offer higher returns on land. Land is scarce in Bihar while labor and water are available in plenty.

There are more agricultural laborers per hectare of land in Bihar than anywhere else in the world. Average plot size is less than 0.25 hectares and low capitalization is said to be one of the key problems of agriculture in the state. Yet one saw combines in paddy fields there. Most combines came from Punjab, but a few local landlords had also invested in them. Drivers and operators were all Punjabis who had long experience of working with these behemoths.

Harvesting by combines was not cheaper than harvesting by manual labor at the going wage rate in Bhabhua. It did save time, but that did not seem to be a big reason for its growing use. Farmers were adopting combines to avoid dealing with organized and, at times, even militant labor class demanding higher wage and greater rights to the land they tilled. Bhabhua and its neighboring districts have been strongholds of the extreme left Maoist Communist Center (MCC). Maoists harass and threaten landowners to cede more rights and greater share of outputs to landless laborers. Laborers organized by Maoists would sometimes boycott harvesting when the crop was ripe for harvest putting farmers in a tough spot. The clash and the conflict would often become violent. I saw gunmen guarding paddy fields during the harvest.

Between the guns and the combines, combines were probably more potent weapons the landlords wielded against the laborers.

Recently, I saw a large number of combines on highways in Madhya Pradesh too. They were all on their way from Punjab to Chhattisgarh, India’s rice bowl, to harvest paddy. I have never been to Chhattisgarh and I know little about the landowner-laborer relationship there. But Chhattisgarh is at the nerve center of the Maoist insurgency in India. I wonder if combines serve the same purpose there too—to make local laborers redundant and powerless against the landowners.

Public Private Partnership of a Different Kind

Lack of adequate power supply constrains economic growth and affects quality of life across India. But nowhere is the problem as severe as it is in my home state, Bihar. Bihar, a state of more than a 100 million people, consumes much less electricity than a satellite city like Gurgaon. Bihar State Electricity Board (BSEB) sold only 5.5 billion units of electricity in year 2010-11, which amounts to annual consumption of 55 units/person in the state. 55 units of electricity cannot even light a 40-watt bulb for 4 hours every evening for a year. Less than 5% of this electricity is generated by the BSEB itself.

The problem of low availability of power is compounded by poor maintenance of the transmission and distribution network. There are power cuts even when power is available. Most villages barely get any power supply. Towns and cities get power for 6-18 hours every day—less in summer, more in winter.

So, how do people cope with the problem? The same way as they do with bad public provision of other essentials like health, education and water. The poor suffer through it while those who can afford, go to private providers for “power back up”. The private provider generates electricity from diesel generators (DG sets) and supplies it using his own distribution system. He promises his consumers—households and business enterprises—to supply electricity when there is a power cut from the public utility company. The consumer pays a flat monthly fee based on the connected load for this service. Thus, a consumer with power back up pays two electricity bills: i) to the utility company based on the number of units of electricity he consumes and ii) a flat fee to the private provider.

The private provider makes more money on a day when power supply from the utility is better because he has to run his DG set for fewer hours. The variable cost of generating power from a DG set is high and a forms a high fraction of the total cost. High variable cost combined with flat tariff creates a strong incentive for the private provider to ensure better power supply from the utility in his service area. Any time there is a power cut due to some fault in the utility distribution line, the private provider makes sure that it is repaired fast. He bribes and cajoles the linesmen and the engineers to repair fast. If needed, he even provides his own men to help workers from the utility. As a result, areas that are served by private power sellers are also served better by the utility.

Each private power seller serves a limited area of a few square kilometers. High distribution losses and the need to monitor pilferage restrict the area he can serve profitably. So, there are a number of private providers in each town and they jostle with each other to keep the utility company on their side—to provide better maintenance and to ensure that there is less power cut during peak hours and more during non-peak hours in their service area. A DG set consumes more diesel when the load is higher and so the running cost is higher during peak hours.

I am not sure of the aggregate impact of private providers on the quality of power supply by the utility company. Many suspect that private power suppliers have vested interest in keeping power supply poor in Bihar. This is an obvious conclusion anyone would reach knowing that private power sellers would lose their business if power supply condition improves substantially. But it’s not true. Total power available for Bihar, from its own generation and imports, is so low that the state has to live with long hours of power cut. And the situation is unlikely to improve much in the next few years. Private power sellers can do little to change this larger reality. Given the constraint of limited power availability, it is in the interest of private sellers that the power supply to consumers is as smooth as possible. As of now, private power sellers of Bihar complement the utility (BSEB) rather than competing with it. They charge high prices (Rs.15 or 30 cents/unit); they pollute environment; and they run an illegal business – but I doubt if they are sabotaging the utility services to make money. In fact, I suspect they are improving it.

A ladder of fuels?

75% of all households in India use solid unprocessed fuels—firewood and dung-cake—as cooking fuels. The fuel is burned in inefficient chulhas (burners) in poorly ventilated kitchens resulting in an estimated half a million premature deaths and nearly 500 million cases of sickness every year—mostly to women and young children. Indoor air pollution is the third leading health risk factor in India and causes many more deaths and disease than the outdoor air pollution about which we hear so much more. A switch to cleaner fuels like Kerosene, LPG (liquid petroleum gas) and biogas will save many lives and reduce drudgery and much suffering. Yet the switch is painfully slow to happen. In rural India almost all households (90%)—rich and poor—use these dirty fuels. Even in urban areas, every third family continues to depend on them, at least partially.

Household fuel choice models envision an energy ladder wherein people move from biomass—to coal, charcoal and kerosene—to LPG, natural gas or electricity, as incomes rise and relative fuel prices change. But that does not seem to be happening, at least not in rural India. NSS surveys show only a marginal shift away from firewood and dung-cake over the last two decades, even as overall household consumption has increased and the price of kerosene oil (a much cleaner fuel) at the PDS shops has remained unchanged even in nominal terms.

Why is the transition to cleaner fuels so slow in India and what would accelerate it? My conjecture—I won’t call it a hypothesis—is that this is because women do almost all the cooking in India and as Pranab Bardhan writes in his latest EPW article, India is a country “where women and children are among the most deprived in the usual way a household is run.” I think if the men were to cook, the fuel switching would be much faster at the same income and relative price levels. But this is just a conjecture and one almost impossible to prove. So, let us leave it at that.

Let us look at the kerosene prices. As the figure shows, the consumer price of kerosene in India is almost completely immune from inflation and oil price shocks which should make it more attractive compared to all other fuels. The heavy subsidy that ensures such low prices of kerosene is worthwhile only if it encourages households to use more kerosene and less firewood and dung. But that does not seem to be happening. Instead, subsidized kerosene is diverted to adulterate diesel and petrol in automobiles. This diversion will only increase with time as diesel and petrol become more expensive while kerosene prices continue to be held down by heavy subsidies. Thus, the subsidy on kerosene—a huge and increasing burden on the taxpayer—not only fails to reduce the indoor air pollution, but also contributes to increased outdoor air pollution through adulteration of automobile fuels.

In the end, I have two empirical questions: first, to what extend does cheaper kerosene lead to reduction in use of firewood and dung-cake as cooking fuels? —An elasticity or cross-elasticity question. Second: given this, what is a better way of providing the subsidy?

Prices in India

I will continue from where I started the last time–prices in India. Last summer, my mom was complaining about price of lentils. Masoor was selling at Rs100/kg—unthinkable! Other lentils were also similarly expensive. I wondered—in a country where half of the kids and women were malnourished and almost all depend on lentils as the main source of protein—what such high prices would do to the National Health!In winter, things were much worse. Now prices were high for all food items and rising fast—faster than any other major economy in the world. Food price inflation was 13.7% in December 2010 and 17% in January 2011. Most Indians (75%) live on less than $2 a day and spend more than half of their monthly income on food. Such high food prices must hit them hard. How are they coping with it?

Fortunately or unfortunately, we haven’t seen food riots in India. The ruling coalition, UPA, is under stress—but not because of rising prices. Even the news cycle is dominated more by corruption scandals than the spiraling food prices. The public outcry, if any, is hard to hear. Why? I do not know. What I do know is that my parents, who are poor but not among the poorest in India, have reduced their milk consumption by half. At the same time their maid is demanding a 40% (Rs. 200) increase in her monthly wage. Rising wages will lead to further rise in inflation, forcing further cuts in consumption.

The bad news is that the food prices are likely to remain high for some time to come. Why do I say so? Three factors: i) current high food prices are not due to bad weather–we had a good monsoon in India in 2010. And the world is due for another El Nino event. ii) In last few years, food supply in India and in much of developing world has not responded significantly to rising demand and high food prices. iii) Oil prices are rising again and a positive correlation is observed between oil and food prices once oil prices go above $80/barrel.

If the food prices persist at such high levels, what will be the impact on India’s poor? Will there be an increase in poverty and malnourishment? What will be the margins of adjustment for the poorest—both at the household and intra-household level? Would children’s education be compromised? Would there be an increase in child labor or a rise in discrimination against the women in the family? Again, I do not know, but I want to find out.

 

Not enough data?

After a long time, I went home to India this winter. I was there to collect price data that the Labour Bureau gathers every week from 94 towns and cities in India to construct the consumer price index for industrial workers (CPIIW). Similar data are collected from another 600 villages and 300 towns by the National Sample Survey Organization (NSSO) for the Labour Bureau to construct other consumer price indices. With some help from well placed friends, I could get the raw data for CPIIW in a neat excel spreadsheet. Obtaining the NSS data will require more effort and one more trip home.

Social scientists will always rue the lack of enough data. Yet I am amazed by how much secondary data is available in India and how underutilized the data remain in both research and policy making. Much of this data is easier to access today than it was a decade ago when I started research. Increasing computer penetration of Government offices has helped. Right to Information (RTI) Act has also made a difference. The data were always there—right from the colonial era. Digitization makes sharing data convenient and cheaper while the RTI is making government departments more willing to share and disseminate what they own.

Today, all ministries and departments in Government of India and even the State Governments have their own websites with a link to Data or Statistics—for easy download. Still, what is available on the internet is only a small fraction of the data that different government bodies collect and collate. After RTI, even these unshared and un-disseminated data are easier to obtain. These changes offer great opportunities to do economics research in India.