Know Your Regulator: Food Safety and Standards Authority of India (FSSAI)

 

What is food regulation?

Food is regulated in order to ensure that it is safe for human consumption. Food regulation guidelines help set reliable standards of disclosure, so people know what goes into an item of food, and can make informed choices about what they eat. The institutionalisation of food regulation also serves the purpose of providing the public with assurance that food is certified as safe for consumption.

This is however a complex task as there are a very large number of persons and enterprises are in the business of food, and by the diversity of enterprise-scale, food cultures and knowledge systems. Food regulation is a public good: everyone benefits from having a credible framework. Food regulation also has economic effects on the production side. It interacts most directly with food processing and production industries, but has effects for every type of food-related economic activity from farm to fork. Moreover, its effects are both domestic and international, as food regulators determine what foods are permitted for importation into their country. There are also legal requirements of inter-legibility between domestic and international standards by virtue of WTO treaty obligations, in which food regulation plays a part.

Regulations must necessarily contend with vast amounts of scientific uncertainty on many issues relating to food. Food regulators therefore formulate their regulations based on an assessment of risk to human health. These regulations are expected to be reasonable in relation to the anticipated risk, and to balance the concerns of health and safety with the economic interests of food businesses.

Scope and Design of Food Regulation

Food is regulated through activities that include setting food safety standards, developing guidelines, mandating disclosure, devising certification standards, testing of products, monitoring and supervision, and the imposition of sanctions and penalties. It also includes public education about food safety amongst the general public and to people and enterprises in the business of producing and selling food.

Food regulation requires scientific expertise and infrastructure. It also has economic and administrative dimensions. It needs to have feet on the ground in every single place where food is made and sold. It needs to be agile, to keep pace with changing marketplace conditions.

In terms of regulatory design, it might be useful to think of food regulation as a domain of specialisation. Food regulation does not need an arms’ length relationship with government, except to establish a domain of specialisation. In fact, India’s food regulation system is quite closely integrated with the executive state for monitoring and enforcement activities, although it has some financial and administrative independence. The parent ministry for food regulation, i.e., the Ministry of Health and Family Welfare, is responsible for providing approvals and support to FSSAI. Food regulation also has a quasi-judicial side, to support its penal and sanctions-making powers.

The Food Safety and Standards Act, 2006 provides the legal framework for food regulation in India. This law was enacted with the objective of consolidating numerous laws and regulations relating to food regulation. It also established an agency to make and implement science-based rules and guidelines applicable to the manufacture, storage, distribution, sale and import of food. Following this law, the Food Safety and Standards Authority of India (‘FSSAI’ or ‘the food authority’) was established in 2008. The law also provides for monitoring and enforcement, and for a system of integration and coordination between regulation, policy and compliance aspects of food regulation. It also provides for coordination between various agencies and officials of the central and state governments in their regulatory work.

FSSAI’s principal function is to make regulations and policy. It lays down standards and guidelines in relation to articles of food, and provides for licensing, registration and accreditation for food business operators. It is mandated to specify systems for enforcing its standards, for accreditation of certification systems and for certification of food safety management systems for food businesses.

FSSAI lays down procedure and guidelines for regulatory activities, including for quality control of food imports, for accreditation of testing labs, for labelling of food articles, and for sampling and analysis of food items. The manner and procedures for risk analysis and risk management in relation to food are also to be laid down by it.

FSSAI also has broad market shaping roles. It may be called upon to provide scientific advice and technical support to central and state governments for framing policy in areas that have a bearing on food safety and nutrition. It can take up initiatives to educate both food business operators and the general public on food safety, hygiene and nutrition. It can also take up self-regulatory interventions – such as through labelling and information campaigns – to encourage manufacturers and consumers to make and eat healthy food.

FSSAI is expected to collect and collate data regarding food consumption, incidence and prevalence of biological risk, contaminants in food, residues of various, contaminants in foods products, identification of emerging risks and introduction of the rapid alert system. It is also expected to contribute to the development of international technical standards for food, sanitary and phytosanitary standards.

Both the content and the rule-making process of food standards are also required to follow India’s commitments to the WTO, under the Agreement for Sanitary and Phytosanitary Measures and the Agreement on Technical Barriers to Trade, which require for standards to be non-discriminatory to international trade. In this, our food standards often guided by the Codex Alimentarius, an international compilation of food standards, although this is non-binding and its local application is sometimes controversial.

Representation, transparency and consultation are important features of food regulation. The law provides for the representation of consumers, farmers, retailers, and food industry, including small scale industry in the composition of the food authority, and in its various panels and committees. Several other ministries of the central government and the state governments, and experts and food scientists are also represented in it. The law also provides – perhaps uniquely for a statutory regulatory authority – that one-third of its 22 members should be women. The law provides for consultation in the regulation-making process, for formal representations by stakeholder groups, and for the disclosure of scientific opinions that it has received and adopted.

The administrative structure of food regulation is made up at the central level of FSSAI, which is advised by several Scientific Panels, a Scientific Committee and a Central Advisory Committee. The administration of food regulation is headed by the Chief Executive Officer (‘CEO’), who is both member secretary of FSSAI and Chairperson of the Central Advisory Committee. At the state-level, food regulation is administered by Commissioners of Food Safety appointed by state governments. Designated officers and food safety officers function at district and local level in coordination with state and local authorities. They have a frontline role in monitoring, inspecting and ensuring compliance with regulations at the local level. In addition, there are Adjudicating Officers and Food Safety Appellate Tribunals, to carry out the adjudication of offences and penalties under the Act.

The Central Advisory Committee and the CEO are responsible for providing administrative coherence to the overall framework for food regulation.

Issues and Challenges

Food regulation has a critical role to play in allaying public concerns about food adulteration, junk foods and the indiscriminate use of chemicals in farming and food processing. This has some Indian dimensions: poor hygiene practices and lack of enforcement capacity. There are also growing concerns about  unhealthy fats, salt and sugar in processed foods, that are to be addressed through food regulation.

There is also the challenge of having differing requirements for small and big enterprises. Regulations that are appropriate for large and organised manufacturers might be quite difficult for small operators to comply with. Perhaps for this reason, our food regulations tend to treat small scale and micro enterprise food businesses as a distinct category from larger businesses, and the rules differently applicable to these categories. This approach might help rationalise the cost of regulation for small enterprises, while ensuring that they are not left out of the regulatory system or made illegal for their inability to comply with regulatory mandates.

Uncertainties about the regulatory process might also be an area of concern for the food authority. The food authority’s actions have been struck down by courts for procedural shortcomings in some instances, whereas in others the courts have directed the authority and food commissioners to ensure improved implementation of the law and regulations.

Some of the other challenges of food regulation include staffing shortages and inadequate laboratory infrastructure, which means that food businesses might see regulation as paperwork rather than as a credible threat of being inspected.

The integration with international markets is another area of challenge. There are several instances in which Indian exporters have been prevented from selling their goods in other countries for failure to comply with local regulations. This could be because of the difference between Indian regulations and international standards, or because it was difficult to monitor and enforce standards for small scale and unorganised suppliers. The Indian government and the food authority have opposed the use of international standards as a backdoor trade barrier, while also promoting increased participation of developing countries in the formulation of international standards.

CPR Faculty Speak: Harish Damodaran

27 October 2021
CPR Faculty Speak: Harish Damodaran
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Harish Damodaran is a Senior Fellow at CPR. He is a journalist with nearly 30 years of experience as a field reporter and editorial analyst with the Press Trust of India, The Hindu Business Line and The Indian Express. Currently National Rural Affairs & Agriculture Editor with The Indian Express, his work and area of interest includes the farm sector, macroeconomics, business and social history. Damodaran has been a Fellow of the New India Foundation, Bangalore (2004) and Visiting Scholar at the Center for the Advanced Study of India, University of Pennsylvania (Spring 2008).

In this edition of CPR Faculty Speak, Damodaran talks about his work and interests at CPR, why they matter, what impact he hopes to achieve and more.

Tell us about your research work and interests at CPR.

My main area of interest – both as a journalist and now researcher at CPR – is agriculture. Working at CPR has given me the opportunity to look at this sector from a more long-term and strategic perspective rather than being focused on the immediate. As a reporter, I would be primarily concerned about the progress of the current monsoon, the impact of its late withdrawal on the standing kharif crop, and whether the government’s recent slashing of import duties on edible oils and pulses may hurt farmers more than leading to any real softening of food inflation for consumers. But at CPR, I am able to think beyond the next harvest/sowing season of how global sugar and coffee prices will behave in response to continuing dry weather in Brazil. And that’s necessary for my own understanding of agriculture.

Why do these issues interest you?

The government’s latest Periodic Labour Force Survey report for 2019-20 has shown that agriculture employs 45.6% of India’s workers, despite contributing to only 16.7% of its GDP at current prices. Any poverty reduction or growth strategy in India is contingent upon agriculture’s performance – its ability to generate employment and incomes. These, I believe, needn’t be just in the farms, but also outside: Crop production per se may take place in farms that cannot absorb more labour. But there is far more potential to create jobs in aggregation, grading, warehousing, processing, transporting and retailing of farm produce – not to speak of supplying fertiliser, seeds, agri-machinery, extension, financing and other services to farmers. Agriculture’s links to the rural or the wider economy is something that most policymakers and economists inadequately appreciate or understand. Nor are the solutions offered – “we need to get people out of agriculture” – particularly helpful, as they don’t answer the simple question of “how” and “where”. In fact, given how little Indian agriculture’s true potential, whether for domestic value-addition or exports, has been exploited, one can even ask “why”!

How does working at CPR help in pursuing your above research interest?

Much of my professional career has been in newsrooms or editorial meetings and focused mainly on the next day’s big story. At CPR, I have been fortunate in interacting with scholars who are as much, if not more, passionate and optimistic about Indian agriculture than me. I would like to specifically mention Mekhala Krishnamurthy and Shoumitro Chatterjee here. Equally, there are many others, including Partha Mukhopadhyay and Yamini Aiyar, who are deeply engaged with issues concerning state capacity that is important when it comes to framing and implementation of policies on agriculture and rural sectors. I have also benefited from participating in conversations with colleagues at CPR’s Initiative on Climate, Energy and Environment. All these interactions would, of course, have been more satisfying without the restrictions on physical meetings imposed post-Covid; I joined CPR this April just when the second wave had hit!

What impact do you aim to achieve through your research?

During my short stint so far, I have been able to contribute to Understanding the Rural Economy, a CPR series that takes cognizance of issues of both current and long-term relevance. A couple of these notes – especially one that points to a possible reversal of dietary and cropping diversification in India during the last decade and another that seeks to estimate the country’s farming population which is significantly agriculture income-dependent – have, I believe, significant policy implications. I hope to write more such detailed notes relating to agriculture and rural policy in the months ahead.

Is there anything else that you are now working on while at CPR?

I have finished writing a firm history of Hatsun Agro Product, India’s largest private dairy company. This just-published book documents both the company that has traversed every potential stage of a business enterprise – from tiny to small, medium, big and, finally, large – and its “new capitalist” founder. Currently, I am working on another business biography project, which is on an “old capitalist” who headed India’s third largest industrial house at the time of Independence. I hope to complete a significant part of work on this project as well in the coming six months!

To know more about Harish Damodaran’s work and research, click here.

Mapping India’s livestock economy

It is well known that livestock has emerged as a key driver of India’s agriculture sector growth in recent times. Disaggregated information based on the National Accounts Statistics (NAS) shows the value of output of livestock products rising from 28.2% of the country’s total agriculture production in 2004-05 to 36.2% in 2018-19. The increase is pronounced, especially after 2013-14 (see Chart 1; agriculture includes crops and products, but not fisheries and forest produce).

Source: National Accounts Statistics

The above trend is also confirmed by the National Statistical Office’s ‘Situation Assessment of Agricultural Households (SAAH)’ reports. These, unlike the production value estimates in the NAS, are based on actual surveys of agricultural households and their incomes from both farm and non-farm sources (for a background, see our previous note https://www.cprindia.org/news/10035).

Table 1 gives the share of livestock in the farm incomes (from cultivation of crops as well as animal husbandry) of agricultural households for different states and all-India.

Table 1: Income from animal husbandry as % of total farm income

2012-13 2018-19
Meghalaya 9.22 3.84
Chhattisgarh 0 10.78
Telangana 8.13 12.25
Mizoram 15.93 16.76
Karnataka 10.85 19.57
Odisha 48.29 20.96
Kerala 14.00 22.40
Madhya Pradesh 15.42 23.11
West Bengal 18.69 23.11
Maharashtra 12.26 24.49
Tripura 10.09 24.79
Sikkim 36.62 25.29
Assam 15.95 25.56
Punjab 13.24 26.13
Uttar Pradesh 15.98 29.32
Haryana 25.16 30.66
Uttarakhand 25.10 38.42
Rajasthan 23.56 38.71
Bihar 13.99 38.83
Himachal Pradesh 26.69 41.51
Andhra Pradesh 34.71 42.80
Jharkhand 45.12 42.87
Tamil Nadu 36.46 43.09
Gujarat 39.69 44.61
Arunachal Pradesh 16.46 44.63
Manipur 34.83 44.90
Jammu & Kashmir 20.73 53.48
Nagaland 30.11 65.41
ALL-INDIA 19.85 29.41

Note: Income refers to net receipts after deducting paid-out expenses; Total farm income includes net receipts from crop production plus farming of animals.

Source: SAAH reports for 2012-13 (NSS 70th Round) and 2018-19 (77th Round).

It can be seen that livestock’s contribution to farm income at all-India level as per the SAAH surveys (29.4% for 2018-19) is lower than its share in agriculture production (36.2%) based on the NAS. Being survey-based, the SAAH data is likely to be more reliable than official production estimates. The latter have been called into question, particularly in respect of milk (https://bit.ly/3lylyVo). Table 2 shows that the average annual production growth of 6.3% estimated by the Department of Animal Husbandry & Dairying (DAHD) during 2015-16 to 2019-20 has exceeded the 3.5-4% yearly increase in liquid milk sales of cooperatives and inflation-adjusted turnover of leading private dairy companies for this period (Table 2).

Table 2: Milk production vs. Sales by organised dairies

Milk

Production

(million tonnes)

Liquid milk marketing by coops* Sales of major private dairies**
2014-15 146.314 312.41 16,573.41
2015-16 155.491 321.28 16,898.96
2016-17 165.404 330.82 19,328.22
2017-18 176.347 349.54 20,457.08
2018-19 187.749 358.09 21,561.97
2019-20 198.440 370.77 23,885.13
Average % growth 6.28 3.49 7.67@

Note: *lakh litres per day; **For 12 large dairy companies in Rs crore; @Unadjusted for inflation. Annual consumer inflation in milk & dairy products averaged 3.6% during 2015-16 to 2019-20.

Source: DAHD, National Dairy Development Board and company results.

But even a 29.4% share of livestock in farm income for 2018-19 is a significant jump from the 19.9% levels only six years ago. From Table 1, it can be seen that in as many as nine states, livestock generates more than 40% of the incomes of agricultural households from farming. This might not be surprising for a state like Gujarat, where the district cooperative unions affiliated to ‘Amul’ procure roughly half of its entire estimated milk output. Nor should it for Tamil Nadu, which is home to India’s largest private sector dairy (Hatsun Agro Product), broiler enterprise (Suguna Foods) and also “egg capital” (Namakkal). Like with Gujarat, organised dairies handle nearly half of Tamil Nadu’s milk production. More than two-thirds of that, though, is accounted for by private dairy companies, as against the near-monopoly enjoyed by the Amul-affiliated cooperatives in Gujarat. Andhra Pradesh is another state with a strong dairy as well as poultry industry (it has, since 2017-18, even overtaken Tamil Nadu as India’s No. 1 egg producer).

What is equally striking about livestock’s share in farm income is that it is higher among smallholders – agricultural households possessing less than one hectare of land. For households in the lowest size classes (below 0.40 hectares or one acre), the net receipts from farming of animals are even more than from cultivation of crops (Table 3).

Table 3: Livestock’s share of farm income by land size (Rs/month)

Land size class (hectares) Net receipts from crop production

(1)

Net receipts from farming of  animals (2) Total Farm income

(3)

(2) as % of (3)
<0.01 1,660 2,084 3,774 55.66
0.01-0.40 977 1,162 2,139 54.32
0.41-1.00 2,683 1,335 4,018 33.23
1.01-2.00 5,269 1,845 7,114 25.93
2.01-4.00 9,432 2,551 11,983 21.29
4.01-10.00 19,645 3,451 23,096 14.94
10.00+ 43,599 11,473 55,072 20.83
All sizes 3,798 1,582 5,380 29.41

Source: SAAH report for 2018-19 (77th Round).

One reason for livestock farming contributing a higher share of income for marginal agricultural households is that it is a more labour– than land-intensive economic activity. Land ownership in rural India is rather iniquitous: According to the SAAH report for 2018-19, 84.7% of rural households have holdings of less than one hectare and they together account for just 34.5% of the total area owned. The same report, however, shows ownership of livestock to be more equitably distributed. For instance, 30% of rural households in the lowest operational holding size class of 0.002-0.005 hectares own milk-producing cows, which is as much as that for those with 3-4 hectares. The average number of in-milk cattle owned per 100 households for this virtually-landless holding class, at 33.4, isn’t also much below the 44.9 for those having 3-4 hectares. The ownership is even more equitable in the case of ovine (sheep/goat) and poultry birds – households with less land tend to keep more of these – although not as much as with buffaloes (Table 4).

Table 4: % of rural households owning livestock & number (N) of livestock per 100 households

Size class of operational holding (ha) In-milk cattle In-milk buffalo Ovine Poultry birds
% N % N % N % N
0.002-0.005 30.0 33.4 13.8 17.7 43.4 267.5 17.8 178.6
0.005-0.040 26.9 37.4 19.3 25.6 34.3 473.3 14.2 108.3
0.040-0.5 20.5 25.4 11.7 14.5 28.6 173.4 13.9 116.3
0.5-1.0 26.4 34.8 17.0 23.0 28.9 195.3 16.1 134.7
1.0-2.0 28.0 39.6 21.3 30.3 27.3 237.0 14.3 179.4
2.0-3.0 30.9 46.5 25.9 40.6 22.5 197.7 10.8 118.6
3.0-4.0 30.1 44.9 34.8 52.5 21.7 149.8 7.2 65.3
4.0-5.0 41.8 74.3 34.8 65.0 23.6 187.0 9.9 94.3
5.0-7.5 46.8 75.8 35.6 59.2 15.6 428.2 6.4 325.8
7.5-10.0 49.7 73.7 44.1 79.0 26.3 260.2 6.0 58.7
10.0-20.0 48.4 79.2 41.2 66.3 23.4 241.2 6.0 76.6
>10.0 36.4 80.5 90.0 168.2 26.1 309.0 16.2 224.7
All sizes* 16.4 21.9 10.7 14.8 21.9 188.8 10.7 133.9

*Includes landless households.

Source: SAAH report for 2018-19.

The viability of livestock rearing over regular crop agriculture for smallholders has been best demonstrated in dairying, more so in states with well-developed milk procurement and marketing systems. The best example of it is, perhaps, the Valsad district union of Amul. This Rs 1,850 crore-turnover union procures an average 8.5 lakh kg per day of milk from its 1.22 lakh producer-members, almost two-thirds of them adivasis. These largely first or second-generation dairy farmers typically keep about three adult milch animals – the first one a freshly-calved cow giving 10-12 litres daily, the second 5-6 months pregnant producing 3-4 litres and the third about 8 months already gone dry. The last animal would, then, calve just when the second one stops lactating. In this way, the farmer is able to sell 15-16 litres daily round the year.

In areas where organised dairies undertaking direct procurement exist, a one-acre farmer can even dedicate her entire land to grow high-yielding protein-rich fodder hybrids/varieties and rear 5-6 crossbred cows.  Feeding this multi-cut/perennial green grass would not only meet the base crude protein requirements of these animals (and their calves/heifers), but also reduce purchases of expensive compound cattle feed/concentrates that need to given only when they are producing milk.

Hybrid broiler technology has, likewise, turned poultry farming into a commercial enterprise even for smallholders. Modern broiler hybrids grow from 35-40 gm chicks to 2-2.5 kg live birds within 40-45 days, as against the traditional free-range/backyard breeds that take 12-16 weeks to attain slaughter weight. A broiler farm, again, requires little land. One acre can easily accommodate 10,000 birds and six batches sold in a year.

The viability of both dairy and poultry, however, rest on three factors. The first is capital. Good crossbred cows and Murrah buffaloes cost upwards of Rs 50,000-60,000. The investment requirement even for a 2,000-bird broiler farm – inclusive of poultry shed, equipment and cost of day-old chicks, feed, medicines and vaccines in the first cycle – would be at least Rs 8 lakh today. That obviously calls for bank loan access or even subsidy, which some states are offering at up to 40% of project cost (https://bit.ly/3DA0Ydx).

The second market access. The Amul model in dairying or the Suguna contract farming integration model in poultry (https://bit.ly/3FFVLmn) basically provide market linkages for producers. Assured offtake along with some minimum guaranteed price is important for any farm produce. In this case, it relates to produce that needs to be sold daily or six times in a year. The farmer’s capital cost recovery and return on labour are a function of both liquidity (being able to sell each time) and price received.

The final point relates to consumption. Demand for animal proteins and fat is part of the normal dietary diversification that comes with rising household incomes. Data from past National Sample Survey rounds have pointed to a significant diversification of consumption – from merely calories/energy-based foods to those incorporating proteins and micronutrients – taking place during the high growth phase of the Indian economy from 2004-05 to 2011-12. A previous note in this series had suggested a stalling or even reversal of this accelerated trend of diversification (https://bit.ly/3lDJO8S). That, of course, has implications for demand and sustained growth of the most dynamic – and possibly, poverty-alleviating – segment of Indian agriculture.

This note, part of the Understanding the Rural Economy series by CPR, has been authored by Harish Damodaran and Samridhi Agarwal.

Find all previous notes as part of the series here:

SCI-FI initiative at CPR signs a Letter of Understanding with HUDD, Odisha, PR & DW, Odisha and UNICEF

23 September 2021

Bhubaneswar, Tuesday, 21 September 2021: The Centre for Policy Research, New Delhi under its initiative ‘Scaling City Institutions for India: Water and Sanitation initiative’ is pleased to announce the signing of a Letter of Understanding (LoU) with the Housing & Urban Development Department (HUDD), Government of Odisha (GoO), PR & DW, Odisha and UNICEF on 21 September, 2021.

Through this unique partnership, SCI-FI initiative will support the Urban –Rural convergence on Faecal Sludge and Septage Management (FSSM) and Plastic Waste Management (PWM) in Odisha to ensure Swachha Odisha and Swastha Odisha. This initiative aims to formalize the efforts to ensure district-wide sanitation by demonstrating the urban-rural convergence of FSSM and PWM services in seven identified districts- Angul, Balasore, Dhenkanal, Ganjam, Khurda, Mayurbhanj, Sambalpur and further mainstreaming across the state.

During the signing, Pratap Jena, Hon’ble Minister, PR&DW & H&UDD, Odisha said that this initiative would contribute towards fulfilling Hon’ble CM’s vision of Swachh Odisha and Sustha Odisha. He said that Odisha has emerged as a champion in managing faecal sludge and plastic waste in 114 ULBs, with this endeavour it will strive to serve the rural population by linking them to urban facilities like FSTPs and MRF for faecal sludge and plastic waste management. He further reiterated that this initiative will strengthen both Panchayati Raj Institutions and Urban Local Bodies to provide efficient services to the citizens of the district through a district wide sanitation approach.

G. Mathi Vathanan, Principal Secretary, H&UDD, Odisha highlighted the uniqueness of the model of urban rural convergence and said that Odisha is a pioneer state in management of faecal sludge and plastic waste. He said that Odisha’s efforts in these areas are getting recognition and accolades. This unique initiative will be able to promote good health of citizens by combating pollution of water bodies and land. He reiterated that this novel initiative will begin with a select districts and subsequently it will be up-scaled state wide covering 32 districts within a year.

Speaking on the partnership, Ashok Kumar Kaluram Meena, Principal Secretary, PR&DW Department said that policy making has to be at state level. Breaking artificial divide of urban and rural governance through convergence is crucial for improving FSM within the state. Urban-rural convergence will aim to achieve ODF sustainability in the State. Odisha has taken various innovative models in transforming sanitation landscape and this initiative is another novel initiative as it will serve rural areas by connecting it with urban facilities. He added that the Department has already notified Odisha Rural Sanitation Policy in 2020 which underscores adoption of safe and scientific management of solid waste with a special focus on plastic waste and liquid waste management.

Suresh Chandra Mahapatra, Chief Secretary, Odisha, delivered the Keynote Address. He said that Odisha has Odisha has made progress on FSM in urban areas through its interventions. Within the last five years, women and transgender groups have been mobilized in managing FSM operations. To sustain these efforts district wide through concerted efforts on FSM and PWM, this partnership would be crucial. This initiative will be operationalized in the first phase in 7 districts (Angul, Balasore, Dhenkanal, Ganjam, Khurda, Mayurbhanj, and Sambalpur) through collaborations with 43 urban local bodies.

Monika Nielsen, Chief Field Officer, UNICEF Odisha said that this is a scalable model. Convergence will attempt to promote cleanliness in villages. UNICEF Odisha team is happy to be part of this journey to scale up this initiative.

Yamini Aiyar, President and Chief Executive, Centre for Policy Research, Delhi expressed that inter department convergence has been part of debates from 90s, however with this unique partnership between urban and rural departments will be pivotal in improving sanitation through a district-wide approach. It will also serve as a lessons for such collaborations for future. She added that state level policies and implementation efforts that break artificial divide between urban and rural governance are crucial for improving sanitation for all.

Sangramjit Nayak, Director, District Administration & Mission Director, H&UDD thanked dignitaries including representatives from 43 ULBs present for the event and assured full support by the state Government to the districts, ULBs and PRIs on this path breaking initiative which will be the first such initiative in the country.

This event was attended by nearly 90 participants. There was representation from Housing and Urban Development Department, Odisha, Panchayati Raj and Drinking Water Department, Odisha, UNICEF Odisha, Centre for Policy Research, District Collectors and ULB officials from all seven districts selected for operationalizing the partnership.

A short presentation made at the event is available from here.

*********

For further information and to schedule interviews about the initiative, please write to: sci-fi@cprindia.org or shubhagato@cprindia.org or anju.dwivedi@cprindia.org or hrudananda@cprindia.org

Centre for Policy Research’s Annual Report 2020-21

12 October 2021
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Dear Friends,

As President, I have come to relish this annual ritual of writing the foreword to CPR’s annual report. This is my moment to bask in the glory of the awe-inspiring public service and high standards of scholarship set by my colleagues. I list here but a few highlights of CPR’s work through this year. I hope this will give you a glimpse of the depth and range of our intellectual and policy engagements and tempt you to go through the contents and publications in this report. In an increasingly chaotic and complex world, CPR scholars have valiantly sought to understand and interpret events through sober, evidence-based discourse. I am proud that through our work, we have stayed true to our fiercely independent spirit and commitment to democratic dialogue.

The reporting year 2020-21 will find its place in history. At every crucial moment, from the national lockdown in March 2020 to the deadly second COVID-19 wave in April 2021, the farmer protests, the significant developments on India’s borders and the geopolitical shifts in our neighborhood, to debates on net-zero targets and building a resilient climate-ready State, CPR scholars remained at the forefront, contributing actively to policy implementation, forging new partnerships with governments, civil society and academia and initiating new research to enrich the policy discourse and interpret the impact of this historical moment.

The health and economic consequences of the pandemic dominated much of CPR’s policy work in this period. Within weeks of the first national lockdown being announced, CPR faculty reoriented their work to respond to COVID-19. Two notable engagements with State governments include appointments of CPR scholars to the COVID-19 Global Advisory Council of the Government of West Bengal and to the Government of Punjab Group of Experts, tasked with developing a post-COVID economic strategy for the state. In addition, CPR scholars were appointed as members of the Lancet COVID-19 Commission India Task Force and the Lancet Citizens’ Commission on Reimagining India’s Health System. Alongside with working at the state and national government level, our COVID-19 response involved active engagement at the grassroots. Accountability Initiative was instrumental in anchoring an alliance called PULSE (Platform to Understand, Learn, Share and Exchange), that includes over 100 members from government, civil society, academia and the donor community. The alliance focuses on ensuring that grassroots experience makes its way into the policy discourse. In addition, they launched a series called Inside Districts, documenting the trials and tribulations of frontline workers in responding to the pandemic. We also undertook several research projects, in partnership with government and academia, to build an evidence base on how to respond to COVID-19. Key research themes included internal migration, urban livelihoods, understanding transmission dynamics and the preparedness of the health system.

Beyond our COVID-19 response, the perils of work from home and tyranny of Zoom notwithstanding, 2020-21 remained a productive year for CPR. Our scholars continued the tradition of publishing path-breaking books, writing in the popular press and engaging in the everyday life of policymaking. We published two important books this year including, Shylashri Shankar’s masterful book, Turmeric Nation: A Passage Through India’s Tastes and Manju Menon and Kanchi Kohli’s Beyond the Coal Rush Rush: A Turning Point for Global Energy and Climate Policy?. Our national level policy contributions ranged from engagements with the Ministry of Jal Shakti, the Finance Commission, the NITI Aayog, the National Commission of Scheduled Caste and Scheduled Tribes, and the Ministry of Environment, Forest and Climate Change, amongst others. We also launched new research and welcomed new faculty in areas such as the rural economy & agriculture, state capacity and regulation, health financing, Dalit politics, election studies, national security and foreign policy.

In the last few years, we have broadened our approach to work more closely at the sub-national level. This year, we deepened our engagements by entering into long-term partnerships with the Government of Punjab and the Government of Odisha to work with the urban development departments on slum upgradation. We also signed two different Memoranda of Association with the Government of Meghalaya to support the planning and finance department and the State Capability Enhancement Project. In addition, new partnerships have been initiated with governments in Andhra Pradesh, Chhattisgarh and Karnataka.

This has been an important year for climate action across the globe, particularly with the release of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) and preparations for the upcoming United Nations Climate Change Conference in November 2021. CPR, through its Initiative on Climate, Energy and Environment (ICEE), as you doubtless know, is home to the country’s leading voices on the issue. We have also played an important role on the global stage, shaping debates on climate change. Continuing this tradition, Navroz Dubash is the lead author for the IPCC chapter on national and subnational policies and institutions to address climate change. In addition, ICEE remained at the forefront of key debates, including on climate institutions, net-zero targets, energy transitions and air pollution. This formidable team is truly at the cutting edge of one of the most pressing issues of our time.

In 2020-21, we welcomed several new colleagues to the CPR family but also suffered difficult losses. In June 2020, we lost Ved Marwah, a long-term associate with CPR and just as I signed off this year’s annual report, we had the devastating news of the sudden passing away of Keshav Desiraju, our governing board member. Both men were amongst India’s finest public servants, whose integrity and commitment were unparalleled. We learnt from them the value of public purpose and CPR remains committed to fulfilling their legacy by remaining true to the values and principles they stood for.

As always, I am grateful for the unflinching support we receive from our governing board under the leadership of Dr Meenakshi Gopinath, whose guidance and commitment to our scholarship has been a consistent source of strength. Our fabulous finance & management team, led by Alaknanda Jain and Anup Roy, who have navigated the chaos of COVID-19 to ensure that our faculty have the space to do their best, even as we become more 21st-century in our day-to-day administration, and our communications team, led by Hemali Sodhi, who have ensured that we transitioned from the seminar room to the Zoom room with ease, while pushing us to reach out to newer audiences. Finally, to our funders. whose trust and support has enabled us to adapt to the new circumstances and new challenges that we confront today. I remain deeply grateful.

 

With warmest thanks,

Yamini Aiyar,
President and Chief Executive,
Centre for Policy Research

Agricultural Households and Farming Income: An initial analysis of variations in income from farming and other sources among agricultural households in India

The Agriculture Census for 2015-16 placed the number of “operational holdings” at 146.45 million. The farmer here is somebody cultivating land without necessarily owning it. The land may be a single piece or multiple plots owned or taken on lease; what matters is the entire area (“holding”) being managed (“operated”) by the same person (“cultivator”) alone or with others.

The National Statistical Office’s (NSO) recently released ‘Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India, 2019’ report has a different definition. The SAS doesn’t focus on operational holdings as the basic unit or on the number of farmers but identifies “agricultural households.” Agricultural households are defined as households having at least one member self-employed in farming and whose annual value of produce from such activity exceeds Rs 4,000. Farming or “agricultural activity” includes cultivation of crops (field, horticultural, plantation and fodder) as well as animal husbandry (dairying, poultry, goat/sheep-rearing, piggery, inland fishery, beekeeping, sericulture, etc.). Self-employment in agriculture can further be either in “principal” or even “subsidiary” status not less than 30 days during the survey reference period of six months (in this case, July-December 2018 for visit-1 and January-June 2019 for visit-2). India, as per this report, had 93.09 million “agricultural households” in 2018-19 (July-June) and 101.98 operational holdings. Of these, 89.58 million holdings were possessed by agricultural households, while 12.40 holdings were possessed by non-agricultural households (i.e., even if the plot was put towards some agricultural production, the household itself was not classified as agricultural by the definition above.

There might be a number of reasons that explain the huge variation—53.36 million – between the Agriculture Census’ and the NSO’s estimates.

The Agricultural Census is collected on a complete enumeration basis. This exercise involves re-tabulation of data from village land records that most states maintain for collating individual field and crop-wise area statistics. The NSO estimates of agricultural households, by contrast, are based on a survey design. The survey sample size for 2018-19 covered 58,035 households (45,714 agricultural) in visit-1 and 56,894 (44,770) in visit-2.

As long as some part of a plot of land has been used towards agricultural production, it is classified as an operational holding. The Agricultural Census begins with the status of the plot, whether it is owned by urban or rural, agricultural or non-agricultural households. The SAS begins with classifying rural households.

Members within a household may operate multiple holdings. While the Agricultural Census treats each of them as separate operational holdings, the NSO’s focus is on the agricultural household. All lands operated individually or jointly by all members of a household are taken as a single production unit or holding. So, if you used the Agricultural Census to estimate the number of farmers, you would consider each operational landholding as representing a farmer. But if you used the SAS, you would be working with the category of agricultural household, even though there might be more than one operational landholding and more than one ‘farmer’ residing in that household.

Given the expansive definition of “agricultural household” used by the SAS, it would follow that agricultural households would likely have multiple sources of income. In this note, we seek to try to understand what this data reveals in terms of the degree of dependance that agricultural households have on different sources of income, how this varies by land possessed and by state, and what the implications of this might be for agricultural, economic and social policy.

For this analysis, we consider net receipts (after deducting paid-out expenses) from crop production plus farming of animals as a percentage of the agricultural household’s total income from all sources. The latter includes income from wages/salary and leasing out of land, net receipts from non-farm business, and earnings from pension/remittance. A ratio above 50 per cent can be construed as significant agricultural dependence.

According to the SAS, the average total monthly income of an agricultural household in India during 2018-19 was Rs 10,829. Out of that, the share of farm income – Rs 3,798 from crop and Rs 1,582 from animal agriculture – was 49.7%. For the average agricultural household, the largest single-source of income was wages/salary (Rs 4,063). This has been cited by a number of analysts to conclude that the average Indian farmer is more of a labourer today (https://bit.ly/3i9Kws3).

Any all-India average, though, hides considerable differences between states and also between landholding sizes. Chart 1 shows the average farming income dependence among agricultural households to be below a third or even a fifth in Jammu & Kashmir, Kerala, West Bengal and Himachal Pradesh, while amounting to over 50% for Maharashtra, Uttar Pradesh and Bihar, and crossing 60% in Punjab, Gujarat, Karnataka, Madhya Pradesh and Meghalaya. (A recent analysis suggests the Meghalaya data may require a closer look and that tasks remains to be undertaken).

Farm income dependence is, moreover, a function of landholding size too. The following charts shows state-wise ratios of net farm receipts (from crop cultivation plus animal husbandry) to total agricultural household incomes across seven size classes of land possessed: <0.01 hectare, 0.01-0.4 hectare, 0.41-1 hectare, 1.01-2 hectares, 2.01-4 hectares, 4.01-10 hectares and above 10 hectares. “Land possessed”, it may be noted, is defined as land owned plus land leased-in minus land leased-out plus public/institutional land encroached upon without ownership/occupancy right. A farmer, by this definition, needn’t own any land. An agricultural household can “possess” land by growing crops or raising animals entirely on other’s land taken on lease.

What clearly emerges from our charts is that farming income dependence is less – between 26% and 44% at an all-India level – when holdings are one hectare and below. But the 50% threshold is surpassed thereafter, rising to 70% in the 2.01-4 hectares land possessed size class and almost touching 90% for above 10 hectares. The 50% threshold is crossed for a majority of states even when land possessed size exceeds one hectare. In the top two size categories – four hectares and above – income from farming contributes over 50 percent of all income for agricultural households in nearly all states. The variations across all charts are of course significant and striking, a point to which we will return later.

In terms of numbers, how many agricultural households in India are primarily dependent on farming income as the largest source of their overall household income?

The NSO Situation Assessment report has state-wise estimates of agricultural households for different size classes based on total land possessed. We have already worked out the ratios of farm income to total agricultural household income for all states across each of these size classes (Charts 2 to 8). Taking only those land size classes for which the farm income dependence ratios are 50% or higher, and adding up the corresponding estimated number of agricultural households, gives us a figure of farming income-dependent households in each state. For instance, Andhra Pradesh has 31.59 lakh agricultural households in all. But the 50% farm income threshold is crossed only for households having more than two hectares of possessed land. They number just 7.46 lakh, or 23.6% of the total agricultural households in the state.

Using the above methodology, we have calculated the number of significantly farming-income dependent households for all states. To repeat, agricultural households deriving a significant share of their income – 50% or more – from farming activity per se. It can be seen from the table below that this population is just over 36 million, which is approximately 39% of the total 93 million-odd agricultural households estimated by the NSO. It is, of course, even lower compared to the 146.5 million operational holdings in the country, as per the Agricultural Census for 2015-16. A previous estimate made by one of the authors of the present note had suggested that there are 47-50 million farmers that derive a significant part of their income from agriculture.

(https://bit.ly/3CLmc7S).

State-wise estimates of Farming income dependent farmers (in thousands)

Farming income dependent

households

Total agricultural households % of Farming income dependant households
Jharkhand 6.6 2808 0.24
Kerala 8.1 1466.9 0.55
West Bengal 75.7 6626.2 1.14
Jammu & Kashmir 12.3 658.3 1.86
Tamil Nadu 60.3 2597.7 2.32
Odisha 283.7 4815.3 5.89
Tripura 25.3 289.3 8.75
Himachal Pradesh 140.5 1034.2 13.59
Sikkim 10.4 65.2 15.95
Uttarakhand 172.9 983.4 17.58
Assam 637.6 3099.7 20.57
Andhra Pradesh 745.5 3159.4 23.60
Haryana 710 1906.7 37.24
Chhattisgarh 1302.6 2985 43.64
Rajasthan 3267.4 7041.5 46.40
Bihar 3351.6 7011.3 47.80
Madhya Pradesh 3489.9 7276.3 47.96
Uttar Pradesh 8746.5 17789.5 49.17
Maharashtra 3646.6 7289.3 50.03
Telangana 1528.2 2668.5 57.27
Punjab 884.3 1473.8 60.00
Gujarat 2499.9 4037.1 61.92
Manipur 166.4 241.2 68.99
Meghalaya 272.2 364.7 74.64
Karnataka 3664 4251.6 86.18
Mizoram 71.5 76.4 93.59
Nagaland 181.6 191.8 94.68
Arunachal Pradesh 152.40 152.4 100
ALL-INDIA 36114 92360.7 39.1

Note: All-India figures are sum total of all states. The total agricultural households are slightly less than the 93.09 million given in the main NSO Situation Assessment report.

Policy conclusions and recommendations

 This note has attempted to make a few key points. First, that estimates for the number of farmers in India based on available national statistical data varies depending on whether you count and base your assumptions on the number of “operational landholdings” or the number of “agricultural households.”

Second, as per the SAS 2019, among the 93 million agricultural households estimated to live in rural India in 2018-19, there is significant variation in the degree of dependence that households have on farming income. The degree of dependence varies across the size of landholding possessed. The NSO Situational Analysis report shows that the 50% farm income-to-total agricultural household income threshold is crossed at an all-India level only when the land possessed size exceeds one hectare or 2.5 acres. The fact is that 70% of agricultural households in the country do not possess even this minimum.

Third, this analysis of the SAS estimates that farming income contributes 50 percent or more of overall income for only 39 percent of agricultural households in India or approximately 36 million households. This may be thought of as the number of farmers who are able to make a living from agriculture, that is, make at least half or more of their living from farming. There are only ten states where this proportion is over 50 percent of the state’s agricultural households.

What are the policy implications emerging from this data and analysis?

Given the diverse role and place of agriculture in the lives and livelihoods of agrarian households and communities, it is not for us or for anyone else to conclude that the value of agricultural land or of farming can be simply equated with the amount or proportion of household income that it brings in. However, both the low levels of total household income and the very low earnings from farming for the vast majority of agricultural households is a harsh reality. Given the very small size of landholding possessed by most farming households, it is also a reality that most agricultural households are increasingly dependent on income from wages and other sources to meet their needs.  This, then, is largely a process of distress-driven diversification. The reasons are structural and reflect deep problems with both the agricultural and non-agricultural economy.

Addressing these different, but interrelated challenges will require both much greater understanding of and investment in farming as livelihood and enterprise, as well as reimagining agriculture and rural livelihoods beyond the farm.

To start with, one must recognise that farming is a specialised and skilled economic activity and enterprise. We must not continue to keep treating it as a welfare sector or an endlessly absorptive residual/subsistence economy. Not everyone can, or need be a farmer. Agriculture policy should prioritise and support those for whom farming is their major source of income. This includes the design and delivery of Minimum support prices, government procurement, agricultural market reforms, infrastructure, irrigation, fertiliser and other input subsidies, Kisan Credit Card loans, crop insurance and export-import policies on farm commodities.

It is especially important to remember that farmers with sizeable operational landholdings, from which they earn the majority of their income, may not be the owners of that land. While India’s statistical data focuses on ‘operational’ holdings and land ‘possessed’, agricultural policy remains steadfastly attached to land ‘ownership’ as a primary criterion for many schemes, benefits and transfers to farmers. This disadvantages many risk-taking and entrepreneurial cultivators across the country.  Even a scheme like Pradhan Mantri Samman Nidhi (PM-Kisan), which provides an income support of Rs 6,000 per year for some 110 million beneficiaries could be much more effectively designed and directed. This will help increase the quantum of support to those who need to be encouraged to remain in or expand their agriculture business. The ongoing protests against the Narendra Modi government’s agriculture reform laws are, perhaps, an expression of the accumulated frustrations and crises facing a prominent section of India’s farming-income dependent households, but they are by no means the only such farmers across the country.

What should be done for the 70% farm households that are mostly dependent on other income sources to eke out a living? Crop-based agriculture policy cannot obviously be the only or main answer. Livestock-based livelihoods are also very important here. Depending on the context, it is possible for even a one-acre farmer to rear five cows and sell 30 litres of milk daily from three at any given time, while dedicating her entire land to growing high-protein fodder crops. The same land can, alternatively, house a broiler farm with up to 10,000 birds and six batches being sold in a year. There are likely to be other, agroecologically and economically better strategies that need to be prioritised.

Further, there is also likely to be significant scope for value-addition and employment outside rather than on the farm as well – be it in aggregating, grading, packaging, transporting, processing, warehousing and retailing the produce, not to speak of supply of agri-inputs, machinery and other services to farmers. All these activities fall within the realm of agriculture, even if outside the farm. Agriculture policy should aim at not only increasing farm incomes, but also adding value to produce outside and closer to the farms. Finally, these will necessarily have to be state-specific and within them region and location-specific strategies that locate rural households at the centre of a larger vision for agricultural and economic development. Policies, moreover, that better understand farm/non-farm interlinkages and better support and enable the necessary and challenging processes and dynamics of diversification on and off the farm.

This note, part of the Understanding the Rural Economy series by CPR, has been authored by Harish Damodaran, Mekhala Krishnamurthy and Samridhi Agarwal.

Find all previous notes as part of the series here:

CPR Faculty Speak: Rahul Verma

30 September 2021
CPR Faculty Speak: Rahul Verma
READ THE FULL INTERVIEW

 

Rahul Verma is a Fellow at the Centre for Policy Research (CPR). He is also Visiting Assistant Professor in the Department of Political Science, Ashoka University. His research interests include voting behavior, party politics, political violence, and media. He is a regular columnist for various news platforms and has published papers in Asian Survey, Economic & Political Weekly, and Studies in Indian Politics. He has a PhD in Political Science from the University of California at Berkeley, US. He completed his MPhil in Political Science from Delhi University, MA in Development Studies from Tata Institute of Social Sciences (TISS), Mumbai, and BA from Kirori Mal College, Delhi University.

In this edition of CPR Faculty Speak, Verma talks about his work and interests at CPR, why they matter, what impact he hopes to achieve and more.

Tell us about your research work and interests at CPR.

At CPR, I lead a team of researchers that broadly work on themes related to Indian politics and political economy. Specifically, my interests lie in voting behavior, party politics, and political violence. At present, we’re analysing the Parliamentary debates of the 15th and 16th Lok Sabha. I’m working on a manuscript with my colleague, Asim Ali on the Congress Party in India, and organising fortnightly discussions with scholars who study political parties on transformations within state-level parties across India. We are also in the final stages of completing an edited volume titled, “Dalits in the New Millennium” with Prof. Sudha Pai, Shyam Babu and 25+ chapter contributors. These research projects are supported by the Rosa Luxemburg Stiftung (RLS).

In addition to these issues, I work closely with the State Capacity Initiative (SCI) here at CPR where, for instance, we’re doing some work on Panchayats and Panchayat Secretaries which ties in with frontline bureaucrats – one area the SCI focuses on. Another key area of my work is the YouGov-Mint-CPR Millennial Surveys (conducted bi-annually) to understand the anxieties and aspirations of millennials situated across India’s towns and cities; financial, political, interpersonal, among others. We are in the process of building such collaborations with different organisations. For example, we have been organising a discussion series on topics of contemporary importance with the Trivedi Centre for Political Data (TCPD) at Ashoka University and a similar series with Lokniti-Centre for the Study of Developing Societies (CSDS). The idea behind undertaking all this research is to stress the importance of politically informed policymaking, in other words, to bring politics back into discussions related to public policies. Finally, apart from training young scholars, we wish to create a community and  network of scholars across the globe to interpret emerging politics in India.

Why do these issues  interest you?

I’ve always been interested in the ‘political’ as influencing everything around us. I believe that the imagination of modern India, especially post-independence, has been a political project. This is not to suggest that we do not have deep civilisational roots and ethos, but since 1947,  the “Idea of India” is deeply political. A project which many thought wouldn’t succeed. There were doomsday predictions about India’s chances to survive as a democracy. Not only have we defied those predictions, but Indian elections are the greatest show on the planet. For sure, democracy has changed India, but it is time that theorists engage seriously with what is happening in this part of the world as we are the busiest laboratory of democracy.

There are now many changes sweeping through our country, with sites of contestation growing, and it is interesting to understand how politicians and parties affect these. As actors with their own set of vested interests who are undoubtedly fallible, there’s no denying that they make mistakes. This strand of political psychology is something we’re looking to bring more into our upcoming research; understanding what shapes and motivates such actions– the ideology, beliefs, preferences and biases they hold. Caricatures aside, these complex actors are central in understanding politically and historically-informed policymaking. Simply put, it’s important to study these leaders as they are not simply prisoners of the past, but making history as we speak!

How have these issues evolved in the country and globally over the years?

Most often issues evolve slowly, even though one feels they’ve woken up to a sudden change. Globally we’ve been seeing a recession in democratic values. Simultaneously, newer forms of campaigning have emerged, and voters have become complex because of a whole host of emergent contingencies and issues. We see the political space fragmenting like never before; but all of this took time. It is just as important to study that interstitial period as it is to understand the contemporary political landscape. Again, we’re in a period of flux and paradoxes that necessitate research, even more so here in India, which offers fertile ground to study complex interrelated phenomena: the rise of a dominant-party system after 25 years of a coalition government, in the midst of a proliferation of numerous representative parties; the conservative beliefs amongst millennials coming up against the increasing political awareness and participation in protests among student-activists, material conditions having improved but citizens continuing to remain strongly rooted to their identities; the examples are many. These contradictions are inherent in the system itself; it has evolved in this way and will continue to do so.

What impact do you aim to achieve through your research?

As I said, the idea is to put the spotlight on politics in understanding the public policies. Institutionally, the idea is to see CPR develop as a hub of cutting edge research on politics and political economy in India. In doing so we would like to scale-up collaborations with scholars in India and across the globe, undertake research for a global audience, mentor young researchers into being ambassadors for CPR and ensure ours is an organisation which becomes a platform for robust debate, disagreements and discussions- the 3 Ds which are so essential in a democracy!

What does a typical day look like for you at CPR?

The pandemic created a ‘new-normal’ but now that some members of my team and I have returned to office, we are making efforts to return to the ‘old-normal’. The work day remains the same – I normally have meetings with my team: either in person or online, to discuss on-going projects and brainstorm on future plans. I try to keep the first half of the day reserved for my personal reading and writing. Apart from this, the day goes by in responding to emails, meeting with faculty colleagues at CPR, making other calls, or in the workshops or talks that we’re organising. I also enjoy spending time with my team, getting to know them more through conversation (and through what they bring for lunch!). This academic year, I’m also teaching at Ashoka University (as Visiting Assistant Professor in the Department of Political Science), so engaging with students takes up a large part of Tuesdays and Thursdays.

What are you currently working on and why is it important?

As I mentioned in the beginning, the team is working on a number of projects right now. Similarly, with the colleagues at the SCI we have created a research agenda on how politics and politicians impact state capacity. Our work on mapping the manifestos of three main national parties since Independence to understand similarities and differences in the issues they focus on is on its way to completion, while our draft manuscript on the Congress party is halfway done. We also have our fortnightly workshops to deliberate on the changing nature of state-level parties, and their future. These research topics coalesce to lend insights into the changing nature of India’s political landscape whereby the country’s arrival into the fourth party system has been informed by significant changes in the form and substance. The emergence of the Bharatiya Janata Party (BJP) as the nationally dominant party and the shrinking of the main opposition are the most important of these. Additionally, ideological shifts currently underway have the potential to transform citizen-state relations and federal dynamics in the coming years. Through our work at CPR, we wish to draw attention towards the operationalisation of this political change and what it means for India’s future.

To know more about Rahul Verma’s work and research, click here.

Whose carbon is burnable? Equity considerations in the allocation of a “right to extract”

FULL ACCESS TO THE JOURNAL ARTICLE, CO-AUTHORED BY NAVROZ K DUBASH
ENVIRONMENTAL JUSTICE CLIMATE RESEARCH

Carbon emissions—and hence fossil fuel combustion—must decline rapidly if warming is to be held below 1.5 or 2 °C. Yet fossil fuels are so deeply entrenched in the broader economy that a rapid transition poses the challenge of significant transitional disruption. Fossil fuels must be phased out even as access to energy services for basic needs and for economic development expands, particularly in developing countries. Nations, communities, and workers that are economically dependent on fossil fuel extraction will need to find a new foundation for livelihoods and revenue. These challenges are surmountable. In principle, societies could undertake a decarbonization transition in which they anticipate the transitional disruption, and cooperate and contribute fairly to minimize and alleviate it. Indeed, if societies do not work to avoid that disruption, a decarbonization transition may not be possible at all. Too many people may conclude they will suffer undue hardship, and thus undermine the political consensus required to undertake an ambitious transition. The principles and framework laid out here are offered as a contribution to understanding the nature of the potential impacts of a transition, principles for equitably sharing the costs of avoiding them, and guidance for prioritizing which fossil resources can still be extracted.

The full article can be accessed here.

Why are Farmers Protesting Against the Government’s Agricultural Reforms?

The Government of India passed three farm reform bills- The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment) Bill, in the Monsoon Session of the Parliament. The passage of these bills has led to widespread protests by farmers across the country. It has also raised critical concerns over the direction in which agricultural reforms should go, the nature of these three bills and the process through which they were passed in Parliament.

In this episode of CPR’s podcast, ThoughtSpace, Yamini Aiyar, President & Chief Executive of CPR, speaks with Dr Mekhala Krishnamurthy, Senior Fellow and Director, State Capacity Initiative at CPR and Associate Professor, Ashoka University, and Ajay Vir Jakhar, Chairperson, Bharat Krishak Samaj. Krishnamurthy and Jakhar are India’s most prolific commentators on agriculture and have deeply studied agricultural reforms. They shed light on what the current reforms mean for the Indian farmer and the future of agriculture in the country.

In an earlier episode of ThoughtSpace, Dr Mekhala Krishnamurthy discussed how the government could strengthen the mandi system to truly double farmers’ incomes. Listen here.

Scholars at CPR have closely followed these developments and studied their implications for agriculture. Read their analysis below:

  • In Hindustan Times, Yamini Aiyar and Mekhala Krishnamurthy highlight how the farmers’ agitation at Delhi’s doorstep exposes deep fault lines and new possibilities in the politics of representation, reform and Centre-state relations. They shed light on the need for a renewed politics of trust to truly reform agriculture.
  • In an article published in Hindustan Times in October, they had examined the federal implications arising out of the way in which the farm laws were passed in Parliament. They highlighted the need for political statesmanship and consensus-building for genuine cooperative federalism to reform agriculture.
  • In a discussion on India Ahead News, Mekhala Krishnamurthy analyses whether farmers will get better prices for their produce with the entry of big companies. She highlights the need to strengthen the farmer’s terms of engagement in the agricultural markets through investment.
  • a discussion on India Ahead News, Yamini Aiyar discusses why the farmers’ protest is an important political moment. She highlights that no country has made a structural transformation from agriculture to industrialisation without first enhancing agricultural productivity. She explains that our failure to do so has led to a deep agrarian crisis, amplified consistently due to policy decisions over the last few years and the economic crisis India now confronts.
  • How have we arrived at a point where the effect of laws promulgated to enable freer trade in agricultural produce has led to the State erecting extraordinary physical barriers to prevent farmers, the producers, from entering the capital city to protest and place their demands? In this video, Mekhala Krishnamurthy discusses  key aspects of the farm laws to contextualise the ongoing farmers’ agitation.
  • In ThePrint, Mekhala Krishnamurthy analyses the issue of licensing and registration of farm produce buyers. She writes, under the new law, farmers won’t know if the PAN-wielding buyer has been registered, and also won’t have access to timely and updated price information in trading areas. Furthermore she highlights that agricultural marketing laws as a whole—need to be re-examined keeping in mind the basic principles, processes, investments, and institutions essential to create the robust and supportive regulatory architecture that agricultural markets in India actually need.
  • In ThePrint, Asim Ali analyses the opposition to the farm laws despite the fact that the agricultural reforms push had all the features and sensibilities of Narendra Modi’s distinctive middle-class politics of aspiration. He highlights that Modi’s middle-class constituency is essentially a coalition of two strikingly distinct classes — the traditional middle classes and the neo-middle classes. These two classes are bound together more by a sensibility and a loose ideological orientation rather than any concrete interests, and these hard limits have become apparent in the farmers’ protest.
  • In a discussion organised by ThePrint, Mekhala Krishnamurthy highlighs how the current farm laws ignore the first principles of reform, which include good price discovery & mechanism to ensure good price settlement for farmers. She underscores the need to to see farmers as active economic agents who deserve investment & support and the need to preserve the diversity and complexity of India’s agricultural systems.
  • In Hindustan Times, Shoumitro Chatterjee highlights the need for a credible risk mitigation strategy. He sheds light on the linkages between the level and volatility of farmer incomes and underscores that freer and integrated markets will make their incomes even more volatile.

Will Ayushman Bharat Work?

BLOG BY JISHNU DAS, YAMINI AIYAR AND JEFFREY HAMMER
HEALTH POLITICS

As the country prepares for the launch of Ayushman Bharat on September 23rd, sceptics may wonder whether this time is truly different. Ayushman Bharat, or Pradhan Mantri- Jan Arogya Yojana (PM-JAY) as it is now called, will attempt to bring millions of poor Indians into a structured health insurance scheme, integrating the latest technology and coordinating between state agencies, insurance firms or state trusts, third-party administrators and thousands of public and private hospitals.

We have been here before. And the same thorny implementation issues are likely to plague Ayushman Bharat, as its predecessor, the Rashtriya Swasthya Bima Yojana (RSBY) and other state-specific insurance models.

If there was one key lesson from that experience, it was this: Even as we have become sick and tired of poor quality and services in the public sector, public funding for the private sector will be no panacea. Not because the private sector can’t perform better, but because, in addition to the old adage that the private sector behaves like the public sector in direct proportion to the subsidies it receives, health insurance brings with it its own set of special concerns.

Good medical care ensures both that the patients receive what they need and do not receive what they do not need. A functioning health insurance system therefore must ensure three different purposes: Patients are not under-treated (the hospital turns you away; doesn’t give you an expensive medicine you need) patients are not over-treated (the hospital gives you an unnecessary procedure or medicines) and patients are not over-charged (you pay more than the price of the service as determined by the insurance scheme).

Ensuring this requires massive investments in adaptive price setting, legislation, third-party monitoring, quality improvements in public sector hospitals and ultimately significant investments in skilled capacity. Increasing government involvement in these five areas will be a critical precondition for fulfilling the promise of a healthier India.

Pricing: If prices could be set such that hospitals always acted as the patient’s best advocate, many of these problems could be solved—and many of the additional issues we discuss below would not arise. But unfortunately, accurately pricing services and ensuring that government gets what it pays for is an almost impossible problem, with perhaps no efficient solution. Prices need to fulfill the dual function of ensuring “neither too much, nor too little”. But if costs for the same procedure differ across hospitals (not only due to quality, but also due to location and capacity), a single price across hospitals can never ensure that both constraints are effectively met, and in fact, it is certain that these prices will never be the “right” prices.

When the price is too low for a hospital, it will either choose not to enroll in the scheme, or it will deny services. When the price is too high, the hospital will make additional profits, or worse, try to convince patients to receive the service even when it is not needed. Reports of unnecessary hysterectomies under RSBY followed from such erroneous pricing.

The fact that a stent will be reimbursed at Rs.40,000 but a heart bypass at Rs 1.2 Lakhs immediately highlights the problem. Even if administrators can perfectly determine what operation the patient received, there is nothing stopping a hospital from choosing the operation that grants higher profits. Why stop at a stent if the bypass nets additional profits? It may be possible to setup complicated verification methods, but problems like “upcoding” (inserting a stent but coding a bypass and perhaps just outright fraud) become more likely the greater the deviation in prices from each hospital’s cost structure.

Getting prices right is the central dilemma in any insurance program and one that all countries struggle to solve. But the one thing that countries implementing large-scale programs have in common is a large analytical and data center that continuously examines procedures, procedure coding and charges from the insurance scheme. Prices have to be frequently negotiated and updated based on the data, and this is a job for specialized teams of hundreds in each state. The precondition for better pricing is state capacity.

Third-party monitoring: Given that we will never get prices exactly right (and for the first decade they may be wildly off), hospitals may both under-treat and over-charge. One of the trickiest problems in RSBY was the denial of services. In the districts where it was implemented, as highlighted in a 2017 study by Karan, Yip and Mahal, RSBY had little to no impact on financial protection for households . One (good) reason could be that people were now accessing health services for conditions that they earlier could not afford to—the impact of RSBY shows up on life, rather than on money.

But two more troubling problems are equally likely. The first is outright denial of services. In West Bengal, in a district one of us was studying, the private hospital would not honor the cards. Patients would turn up, and would be turned back. In the West Bengal case, prices for some procedures were set too low for the hospital to make a profit on these cases, and therefore it made no financial sense for hospitals to cater to these conditions. There have been other cases where patients have been turned back because hospitals were not being reimbursed for their claims on a timely basis. The second is that hospitals may increase the prices of the service and force patients to pay out-of-pocket. Subsidies to providers are shared among the provider and the consumer depending on demand and supply elasticities. If there is only one hospital in the district, the hospital knows that patients have little choice but to pay up.

The problem with denials and top-up pricing is that they do not show up in routine administrative data—the RSBY card was not used; the payment was off the books. Grievance redress and call centers may prove useful, but only if they can immediately influence the outcome for the patient. The RSBY tried to deal with this problem through stated guidelines that allowed local NGOs and partners to setup health desks in hospitals to help patients navigate the scheme and the hospital. Unfortunately, there were few takers. Crucial to the success of Ayushman Bharat therefore is the creation of an eco-system of mediators and facilitators that will serve as a link between the scheme, third party insurers and the hospital. The proposed ‘Arogya Mitras’​ are a step in the right direction, but will require both the authority and the ability to guide patients through hospital care, perhaps in direct opposition to the hospitals’ own objectives. That they will be hired by the private hospitals themselves in several states sets up a direct conflict of interest and undermines their potential to be vigilant observers.

Regulation and Insurance Fraud: In tandem, the scheme will require dedicated teams with supporting legislation to control fraud. Ajay Shah, Ila Patnaik, Shefali Malhotra and Shubho Roy have shown that all 17 insurance ombudsman offices in India are currently vacant with a backlog of 9000 complaints. Gaps in the current regulatory framework imply that there is no established procedure for settlement of claims, redress of consumer behavior against rejection of claims or even penalties for rejecting claims in in violation of existing regulations. This in turn creates incentives for regular violation of norms by insurance companies. Not surprisingly, the complaints rate in India is orders of magnitude higher than comparable jurisdictions across the globe. The success of Ayushman Bharat is now intrinsically tied not only to the functioning of the health department, but also the criminal justice and court systems. For Ayusham Bharat to succeed, on September 23rd the Government of India must unveil not just an insurance plan but a new, stronger legislative framework for regulation and insurance fraud.

Improving Government Hospitals: Finally, there is no getting around the critical need to strengthen government hospitals. In the long run, well-functioning public hospitals will provide a much-needed backstop against predatory practices, denial of service and overcharging in the private sector. Especially in districts where competition is limited, public hospitals will limit the monopoly power of the private sector, flush with the new money from the scheme. A framework for transferring resources from the scheme to help government hospitals improve their quality is just as important as funding flows to the private sector.

Capacity: All of this with require significant investments in state capacity. As in the RSBY state governments will handle most of the implementation and this will require an interest, willingness and, above all, capacity within state governments to make massive investments in the administrative structure. Some numbers may help.

In the United States, the (largely) single-purchaser Medicare scheme employs 6000 people to cover 44 million beneficiaries. These are all highly trained administrative staff handling insurance audits, pricing and medical records; dealing with anti-trust cases and fraud and examining billing issues in each state. Consider U.P where the scheme may cover 50% of the population, or 100 million people. That would imply that the administrative staff to run a single purchaser scheme should be above 10,000. But the RSBY headquarters in UP had 42 staff including a Chief Executive Officer, Nodal officer, contractual staff and medical officers. Bihar employed about 10 full-time staff and even in southern states with a longer history running large scale health insurance programs, offices remain thinly staffed. The Tamil Nadu state office as well as, Arogyashri in Telengana employ fewer than 100 staff each. The point is simply this. Running a scheme as complex as a large-scale health insurance program requires people. To be successful, Ayushman Bharat must be prepared to make such large-scale investments in human resources at state government headquarters. Since the expertise currently does not exist (at least at this scale) we will have to develop the necessary institutions that will train these professionals.

The foundational pillars will still not ensure that patients receive the care they need, or even that they won’t emerge in a worse condition than they were when they entered. Clearly, that should be the key focus of Ayushman Bharat. But we won’t get there without first getting the institutional architecture right.

It would be a huge mistake to think that we can deliver care without improving state functioning by devolving responsibilities to the private sector. We can’t. In fact, with a scheme like Ayushman Bharat, our state capacity now needs to go far beyond the health sector to complex regulation, industry practices, the police and the courts. This is a challenge for the entire country. And it is the metric against which the Ayushman bharat should be monitored and what the government should be held accountable for.

Jishnu Das is a Senior Visiting Fellow, Centre for Policy Research. Yamini Aiyar is the President and Chief Executive, CPR. Jeffrey Hammer is formerly Charles and Marie Robertson Visiting Professor of Economic Development at the Woodrow Wilson School of Princeton University.