This week's edition of the EPW is devoted to Cash Transfers as a policy measure. It contains several articles which are for and against the move towards cash transfers.
The debates on cash transfers have intensified in the last one year. Highly satisfying to see that I worked on a project in a course at IRMA on this cash transfer aspect.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Sunday, May 22, 2011
Wednesday, May 11, 2011
Jean Dreze on Conditional Cash Transfers
Jean Dreze in an Indian Express article is not too gung-ho about cash transfers. He does raise some interesting issues. But, given the excitement of UID being a panacea for leakage issues, I see Cash Transfers being a reality pretty soon.
Saturday, April 23, 2011
Jean Dreze on Basu's idea:A more nuanced view
Unlike Sainath who wrote a very shallow article against Basu's idea about harassment bribes, economist John Dreze, a member of the National Advisory Council has a trenchant article against the idea published in the Indian Express.
Friday, April 22, 2011
P Sainath on Kaushik Basu's idea
My earlier post on the harassment bribes idea by Kaushik Basu had a comment deriding the idea.
P.Sainath, the rural affairs editor of Hindu has criticized the entire idea in a column he wrote for the Hindu.
Read the comments that readers have left below that article. And you understand why P Sainath is really no more than a journalist who likes to whip up sentiments and emotions and nothing more ala the television anchors on news channels.
Monday, April 18, 2011
Harassment Bribes: Kaushik Basu's new idea
The 2G scam and the Anna Hazare movement has galvanised the media and large sections of the population to lash out at the powers that be against corruption.However, all I could hear was criticism (even at the jan lok pal bill) and no constructive argument on how to curb corruption. Until of course, Kaushik Basu's trenchant working paper titled "Why for a class of bribes, the Act of Giving a bribe should be treated as legal" came out on the finance ministry's website
Its a very well written paper. He argues that bribe givers who are forced to give bribes to receive legal entitlements should not be treated as criminals. Currently the law does not distinguish between bribe giver and bribe taker. Basu says that incidence of such bribes (he calls them "harassment bribes") will go down once the bribe giver is given legal immunity. Under this scenario, since the interests of the bribe giver and the bribe taker are orthogonal, the bribe giver will want to report such instances of harassment bribes because he will no longer be considered as abetting the act of bribery and also he will receive the amount he gave to the bribe taker. In other words, the comfort zone that currently exists between the two parties will not exist under the proposed change.
Of course, he states that in case of non-harassment bribes, the bribe giver should not have legal immunity but the punishment meted out to the bribe taker should be substantially higher.
Of course, there are caveats in place. Basu says that giving such immunity will not lead to complete disappearance of bribes in our society.Other important steps like use of e-technology to minimise the interface between the public servant and the citizen would be helpful in curbing corruption. Also, it is only when we build up values of honesty and integrity in society will be there a great reduction in corruption. Of course, Basu does contend that economics as a subject considers human beings as endlessly self-seeking.But he does provide evidence that we are not always endlessly self-seeking and that market economies (which we are trying to build) will not be efficient unless human beings are endowed with a minimal amount of integrity and pro-sociality.
(For those interested in reading the full working paper, here is the link)
Its a very well written paper. He argues that bribe givers who are forced to give bribes to receive legal entitlements should not be treated as criminals. Currently the law does not distinguish between bribe giver and bribe taker. Basu says that incidence of such bribes (he calls them "harassment bribes") will go down once the bribe giver is given legal immunity. Under this scenario, since the interests of the bribe giver and the bribe taker are orthogonal, the bribe giver will want to report such instances of harassment bribes because he will no longer be considered as abetting the act of bribery and also he will receive the amount he gave to the bribe taker. In other words, the comfort zone that currently exists between the two parties will not exist under the proposed change.
Of course, he states that in case of non-harassment bribes, the bribe giver should not have legal immunity but the punishment meted out to the bribe taker should be substantially higher.
Of course, there are caveats in place. Basu says that giving such immunity will not lead to complete disappearance of bribes in our society.Other important steps like use of e-technology to minimise the interface between the public servant and the citizen would be helpful in curbing corruption. Also, it is only when we build up values of honesty and integrity in society will be there a great reduction in corruption. Of course, Basu does contend that economics as a subject considers human beings as endlessly self-seeking.But he does provide evidence that we are not always endlessly self-seeking and that market economies (which we are trying to build) will not be efficient unless human beings are endowed with a minimal amount of integrity and pro-sociality.
(For those interested in reading the full working paper, here is the link)
Thursday, February 25, 2010
Some thoughts on the Inclusive growth chapter of the Economic Survey
The Economic Survey was released today. To the ones who usually skip such “heavy” economic matters, an Economic Survey, according to an ET columnist Mythili Bhusnurmath are ready reckoners on the state of the economy during a year that is fast drawing to a close. Only to a far lesser extent can they be said to be a portent of what is likely to follow in the subsequent year. This is because they are largely a technical view of finance ministry technocrats. Thus to the extent Surveys are relatively divorced from the political ground realities that play a dominant role in decision-making by democratically elected governments, they also tend to be a little idealistic.
This year’s survey includes a chapter on inclusive growth. And I am very happy about it as increasingly there is disenchantment with the “high rates of growth” talk that usually crowds our newspapers. It is extremely naïve ( and I was naïve) to believe that high GDP rates of growth would automatically mitigate poverty and bring prosperity to large sections of Indians. But that of course is not true.
The increase in GDP is due to high growth in services and to some extent in industry. Services account for more than fifty per cent of our GDP and hence high growth rates in this sector will propel our GDP to high levels as well. Industry is doing well but since 80s its contribution to GDP has stagnated in the mid twenties.
The problem then lies in Agriculture. We have a sector which employs more than 60 per cent of our population and is projected to grow at .2 percent this year. It also contributes least to the GDP of our country. Now that leaves a huge section of our population staring at abject poverty. Farm output growth is projected at 0 per cent largely due to the drought that occurred last year. So this high GDP growth does not really matter to around 60 crore people of our country.
It’s a big deal for policy makers to include a chapter on inclusive growth as it reflects the realities that we confront today.
So what is inclusive growth? The survey mentions “A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggests that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join in the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence, get left behind.”
It is an acknowledgement of the fact that a large section of population needs to be integrated with the mainstream economy so that they too can enjoy the fruits of the high growth we are fortunate to witness in these times.
The chapter deals with the role of the government as an “enabler” which does not try to directly deliver to the citizens everything that they need. Instead, it (1) creates an enabling ethos for the market so that individual enterprise can flourish and citizens can, for the most part, provide for the needs of one another, and (2) steps in to help those who do not manage to do well for themselves, for there will always be individuals, no matter what the system, who need support and help. Hence we need a Government that, when it comes to the market, sets effective, incentive compatible rules and remains on the sidelines with minimal interference, and, at the same time, plays an important role in directly helping the poor by ensuring that they get basic education and health services and receive adequate nutrition and food.This rollback of the Government in the former will enable it to devote more energy and resources to and be more effective in the latter.
It elaborates how this can be done by focusing on specific issues like replacing the PDS with a “food voucher coupons”, advocating the same coupon approach in lieu of subsidy for fertilizers, etc. It also looks at bureaucratic delays and costs to buttress its point of advocating the “enabler” role of the government.
Overall it is a refreshing addition to the Economic Survey as it goes beyond sector wise discussion, and fascination with the short term numbers and takes a hard look at the long term.
If this post prods you to read that chapter, here is the link. http://beta.thehindu.com/multimedia/archive/00034/Economic_Survey-2_pd_34134a.pdf
This year’s survey includes a chapter on inclusive growth. And I am very happy about it as increasingly there is disenchantment with the “high rates of growth” talk that usually crowds our newspapers. It is extremely naïve ( and I was naïve) to believe that high GDP rates of growth would automatically mitigate poverty and bring prosperity to large sections of Indians. But that of course is not true.
The increase in GDP is due to high growth in services and to some extent in industry. Services account for more than fifty per cent of our GDP and hence high growth rates in this sector will propel our GDP to high levels as well. Industry is doing well but since 80s its contribution to GDP has stagnated in the mid twenties.
The problem then lies in Agriculture. We have a sector which employs more than 60 per cent of our population and is projected to grow at .2 percent this year. It also contributes least to the GDP of our country. Now that leaves a huge section of our population staring at abject poverty. Farm output growth is projected at 0 per cent largely due to the drought that occurred last year. So this high GDP growth does not really matter to around 60 crore people of our country.
It’s a big deal for policy makers to include a chapter on inclusive growth as it reflects the realities that we confront today.
So what is inclusive growth? The survey mentions “A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggests that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join in the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence, get left behind.”
It is an acknowledgement of the fact that a large section of population needs to be integrated with the mainstream economy so that they too can enjoy the fruits of the high growth we are fortunate to witness in these times.
The chapter deals with the role of the government as an “enabler” which does not try to directly deliver to the citizens everything that they need. Instead, it (1) creates an enabling ethos for the market so that individual enterprise can flourish and citizens can, for the most part, provide for the needs of one another, and (2) steps in to help those who do not manage to do well for themselves, for there will always be individuals, no matter what the system, who need support and help. Hence we need a Government that, when it comes to the market, sets effective, incentive compatible rules and remains on the sidelines with minimal interference, and, at the same time, plays an important role in directly helping the poor by ensuring that they get basic education and health services and receive adequate nutrition and food.This rollback of the Government in the former will enable it to devote more energy and resources to and be more effective in the latter.
It elaborates how this can be done by focusing on specific issues like replacing the PDS with a “food voucher coupons”, advocating the same coupon approach in lieu of subsidy for fertilizers, etc. It also looks at bureaucratic delays and costs to buttress its point of advocating the “enabler” role of the government.
Overall it is a refreshing addition to the Economic Survey as it goes beyond sector wise discussion, and fascination with the short term numbers and takes a hard look at the long term.
If this post prods you to read that chapter, here is the link. http://beta.thehindu.com/multimedia/archive/00034/Economic_Survey-2_pd_34134a.pdf
Subscribe to:
Posts (Atom)