Author: cprindia

CHAPTER BY SHAMINDRA NATH ROY AND PARTHA MUKHOPADHYAY IN OXFAM INDIA’S REPORT ‘MIND THE GAP: THE STATE OF EMPLOYMENT IN INDIA’
ECONOMY

India is one of the lowest globally in terms of female labour force participation (FLFP), ranking only better than Pakistan in South Asia. While the decline in FLFP in rural areas is starkly visible, the urban FLFP has been consistently low since the 1980s despite higher economic growth and increasing level of education among females. The economic offset created by such low FLFP is huge and if, for instance, it (16.8%) could be raised to the level of FLFP in China (61.5%)[1], it has the potential to raise India’s GDP up to 27%. This chapter attempts to investigate the structural deficiencies behind this consistently low urban FLFP through a variety of perspectives, ranging from measuring the complexity of women’s work to the implications of caste, location and family structure. It finds factors like presence of female-friendly industries, provision of regular salaried jobs and policies that cater to women’s needs to work near home like availability of part-time work, can improve the situation, though prejudices arising from patriarchy require to be addressed to make these measures truly transformative and not palliative.

[1] This is from the International Labour Organisation (ILO) model estimate for 15+ population in the World Development Indicators of the World Bank, 2018.

The full chapter in the report can be accessed here.

Price increases have been largely in imported items like edible oils and pulses. There is no generalized food inflation yet only because of subdued demand conditions.

Low inflation, particularly in food items, was a significant feature of the Narendra Modi government’s first term in office. Annual Consumer Price Index (CPI) inflation averaged 4.3% during that period from June 2014 to May 2019. It was even lower, at 3.3 %, for the Consumer Food Price Index (CFPI) inflation. There was also an extended period, from September 2016 to August 2019, when the CFPI inflation rate ruled below general CPI inflation in each of those 36 months.

The Modi government’s second term has been different by contrast. Between June 2019 and May 2021, average annual CPI inflation has been 5.7%, while even higher, at 7.4%, for CFPI inflation. The chart below captures these trends. In combination with retail prices of petrol, diesel and LPG rising since June 2019 – from Rs 71.73/litre, Rs 66.51/litre and Rs 712.5/cylinder to Rs 97.76, Rs 88.30 and Rs 809, respectively in Delhi – it is clear that both food and fuel inflation have returned (Just for comparison: On May 31, 2014, petrol retailed at Rs 71.41/litre, diesel at Rs 56.71/litre and LPG at Rs 414/cylinder).

Source: National Statistical Office.

Much of the above inflation is imported, which is most obvious in fuel. Between May 2020 and May 2021, the average price of crude oil imported by Indian refiners has more than doubled from $30.61 to $66.95 per barrel (Brent has since breached the $75/barrel psychological level). This has, however, also been exacerbated by the Modi government hiking the excise duty on petrol and diesel by Rs 13 and Rs 16/litre, respectively during March-May 2020.

In the case of food inflation, too, the fall during the Modi-1 period was substantially enabled by international prices. Between May 2014 and May 2019, the UN Food and Agriculture Organization’s (FAO) world Food Price Index (FPI) dropped from 121.3 to 94.2 points (base year 2014-16=100). The global FPI inflation rate, however, started climbing from October 2019. That was roughly when domestic CFPI inflation also crossed the 5% mark for the first time in over three years. Both global and domestic food inflation saw an uptrend till February 2020, before the novel coronavirus pandemic struck. There was a divergence thereafter. The FPI inflation crashed, even as CFPI inflation remained at near double digits till November.

India’s food inflation began easing with the harvesting of the post-monsoon kharif crop, interestingly, when a recovery in global food prices was gathering steam. The FAO-FPI inflation started soaring from around October, as demand returned with economies unlocking and restoration of supply chains taking time. Dry weather-induced production shortfalls in Brazil, Argentina, Ukraine, Thailand and even the US, along with Chinese stockpiling, added fuel to the fire. The FAO-FPI hit 127.1 points in May 2021, its highest level since September 2011. On the other hand, retail food inflation in India, even at 5% in May, was way below the corresponding global rate of close to 40% (see chart below).

Source: National Statistical Office and FAO.

The impact of surging global prices on domestic food inflation has been largely on commodities that India significantly imports. The country annually imports 13-15 million tonnes (mt) of edible oil and produces only 7.5-8.5 mt. In pulses, domestic output has gone up from 15-16 mt to 22-23 mt in the last five years. While imports have also halved to 2.5-3 mt, they do still exert considerable influence on domestic prices.

The table below shows that edible oil and pulses are the food items to have registered the highest price increase in the last one year. At the same time, cereals, sugar, milk and even staple vegetables (potato, onion and tomato) have recorded little or no inflation.

All-India Modal Retail Price (Rs/kg)

Source: Department of Consumer Affairs.

The reasons are two-fold. The first is that these are foods predominantly produced domestically. The good monsoons in 2019 and 2020 – India, Australia and Canada were the only top agricultural powerhouse countries that did not face serious weather-related issues – have ensured no supply shortages in their case. The second reason has to do with the collapse of demand from successive Covid-triggered lockdowns. With hotels, eateries, sweetmeat shops, hostels and canteens either shut or operating at low capacity, apart from no wedding receptions and other public functions, food demand has been confined mostly to households. Even household consumption has probably been affected because of incomes taking a hit from the reduction in overall economic activity.

Simply put, while food inflation has made a comeback in India, it is not yet generalized in terms of sustained across-the-board price increases, of the kind witnessed during the previous United Progressive Alliance regime’s second term from 2009-10 to 2013-14. As of now, inflation is only in imported food items.

There are three factors that would influence the course of food inflation in the coming months. The first is international prices. The FAO’s benchmark index is now at a near-decade-high. It must be noted, though, that the same index, only a year before (May 2020), had plunged to 91 points, its lowest in four years. Whether the current global price surge is a pointer to a renewed “commodity supercycle” or simply a result of temporary supply-side disruptions remains to be seen.

The table below shows that global prices of all major agricultural commodities have risen considerably over last year. But they have also fallen off their peaks, which were mainly reached in May and reflected in the FAO price index for that month. The decline from the peaks is visible especially in palm and soyabean oil. That should, in turn, have some salutary effect back home. Cooking oil is the one item that has been really on fire in recent months!

International agri-commodity prices

Note: Wheat, corn and soyabean prices refer to the most actively-traded futures contracts at the Chicago Board of Trade. One bushel equals 27.2155 kg of soyabean and wheat and 25.40 kg of corn. Raw sugar and coffee prices are for the most actively-traded futures at the Intercontinental Exchange. Skim milk powder price is the average at the fortnightly Global Dairy Trade auctions. Crude palm oil price is for the most actively-traded futures at the Bursa Malaysia exchange.  Rubber price is for RSS-4 grade at Bangkok. Cotton price is the average based on the Cotlook ‘A’ index.

The second factor that will determine the outlook for food inflation in India is the monsoon. While the rains were 74% surplus in May, the southwest monsoon season (June-September) has itself so far recorded 26% above-average rainfall. These should induce higher kharif crop plantings that have already taken off. But since production is a function of both acreages and yields, a great deal rests on the rains during July-August, when the crop reaches the vegetative growth stage. 2019 and 2020 were excellent monsoon years. A third successive good monsoon should effectively put a lid on food inflation. That would be even more so if farmers expand acreages under oilseeds and pulses, which looks quite probable given the current market prices.

A third factor is the impact of fuel cost increases. The scope for their pass-through to consumers is today limited in an overall demand-constrained environment. Take milk. Dairies incur cost for its transport, first from the village collection centres to the processing plants that generally takes place in 2,000-3,000 litres mini-trucks. The milk that is pasteurized and packaged is further dispatched from the plants to the markets in bigger 10,000-15,000 litres tankers. Most dairies haven’t raised pouch milk prices, despite diesel costs going up by over Rs 15/litre in the last one year alone. What many of them have, however, done is reduce the prices paid to farmers. In Maharashtra, for instance, procurement prices of cow milk containing 3% fat and 8.5% solids-not-fat have fallen from Rs 31-32 per litre in February-March (pre-second wave) to Rs 21-25 now. In other words, the fuel pass-through has happened not by revising upwards the prices to consumers, but by lowering the prices paid to producers. In the event of a general growth and demand revival – whenever that happens – we could see processors, transporters and even farmers passing on the increase in fuel costs to consumers.

To the above three likely determinants, one may add a fourth, which is political. The Modi-1 administration’s tenure was marked by hawkishness on food inflation and privileging consumers over producers. During Modi-2, there has been focus on expanding minimum support price-based procurement, with new records in government purchases, particularly of wheat and paddy, getting established. Some of that has been prompted by the farmer protests against the Centre’s three agricultural reform laws.

The upcoming state elections in Uttar Pradesh might elicit similar political response in respect of sugarcane, where the minimum price payable to growers has hardly been revised during the four years of the Yogi Adityanath-led administration. How much of sugar price increase would the Modi government allow, in order to enable mills to pay more and on time to cane farmers? These are the kind of questions it may have to confront in other crops too, where the domestic supply-demand balance and international price environment are also more favourable to producers than a year ago.

Find all previous notes as part of the series here:

• Can rural play “savior” again? Agricultural seasons and COVID-19 waves by Mekhala Krishnamurthy and Harish Damodaran
• How ‘food’ has become the real social safety net in pandemic by Harish Damodaran
• Has MGNREGS Helped the Rural Economy in 2021? by Yamini Aiyar, Avani Kapur and Harish Damodaran
• Employment U-turn: Rural India is India’s main employer by Harish Damodaran and Yamini Aiyar
• Agricultural Households and Farming Income: An initial analysis of variations in income from farming and other sources among agricultural households in India by Harish Damodaran, Mekhala Krishnamurthy and Samridhi Agarwal
• Carbohydrates to proteins and back: How dietary and cropping diversification seems to have gone into reverse by Harish Damodaran, Mekhala Krishnamurthy and Samridhi Agarwal.
• Mapping India’s livestock economy by Harish Damodaran and Samridhi Agarwal.
• Unlocking the potential of Ganna Pradesh
• The Future of MSP by Harish Damodaran
• The Return of Food Inflation: Why its Different this time by Samridhi Agarwal and Harish Damodaran

A TALK BY TARIQ THACHIL
URBAN GOVERNANCE

Listen to a talk (above) by Thariq Thachil, Peter Strauss Assistant Professor of Political Science at Yale University where he presents the findings from his paper ‘Who Becomes a Slum Leader in Urban India?’

The talk describes the results and inferences from a study conducted by Adam Auerbach and Tariq Thachil that investigates the role of political brokers in the slums of two Indian cities. The study, based on an extensive survey experiment with 2,199 residents across 110 slum settlements in Jaipur and Bhopal, broadly found that slum leaders emerge through bottom-up selection by slum residents.

VIEW FROM THE STATES
INTERNATIONAL POLITICS

Watch the video (above) of the discussion on ‘US Presidential Elections: View from the States’ with Representative Jay Kaufman (Massachusetts House of Representatives) and Senator Curtis Bramble (Utah State Senate).

FULL AUDIO RECORDING
RIGHTS

Listen to the full audio recording (above) of the CPR-LRI talk, where Venkatesh Nayak shares his experience of working on land acquisition in India. He examines the proposal to amend the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The talk was organised by the Land Rights Initiative at Centre for Policy Research.

WATCH THE FULL VIDEO
INTERNATIONAL POLITICS

Watch the full video of the virtual talk and panel discussion on ‘Topping the Glass Half Full: Opportunities for Regional Trade in South Asia’. The talk was delivered by Dr Sanjay Kathuria (Senior Visiting Fellow, CPR) who is the editor of the book, and was followed by a panel discussion featuring Ambassador Shyam Saran (Former Foreign Secretary & Senior Fellow, CPR); Dr Nagesh Kumar [Director and Head, South and South-West Asia (SSWA) Office, UNESCAP]; Dr Selim Raihan (Professor, Department of Economics, University of Dhaka); and chaired by Ambassador Gautam Mukhopadhaya (Senior Visiting Fellow, CPR).

It would be no overstatement to say that seventy years after the decolonisation of South Asia, economic integration of the region remains disappointing. Intraregional trade as a share of regional gross domestic product (GDP) hovers around only 1 percent in South Asia, versus 2.6 percent in Sub-Saharan Africa and about 11 percent in East Asia and the Pacific. Yet, world history has repeatedly shown trade to be a crucial tool for poverty reduction. Centered around the book A Glass Half Full: The Promise of Regional Trade in South Asia, this event discussed various challenges to regional economic integration and lessons that can be learned from some success stories.

A TRIBUTE BY BHANU JOSHI ON HIS FIRST DEATH ANNIVERSARY
OBITUARIES

Kallidaikurichi Chidambarakrishnan Sivaramakrishnan died on 28th May 2015. On his first death anniversary, Bhanu Joshi remembers him.

What is the institutional architecture within which we foresee India’s urbanisation? What framework of governance – public or private do we think would be able to provide better services to the urban India?

Kallidaikurichi Chidambarakrishnan Sivaramakrishnan or KCS, as many of us called him, was amongst the first to ask and continued engaging with this question over his lifetime. Chief Executive of the Calcutta Metropolitan Development Authority, and secretary in both the Ministry of Urban Development and the Ministry of Commerce, Professor and chairman of the Centre for Policy Research, he was one of the pioneering interpreters of urbanisation in modern India.

A man whose commentary and work ranged from delimitation to the environment and climate change, from Ganga water management to South Asian cooperation, KCS was most valued for his contribution to understanding decentralisation in India. He was involved in the making of the watershed 65th Constitutional Bill, which later became the 74th Constitutional Amendment (CAA). The longest amendment to the Constitution of India, it was the 74th CAA, which mandated the creation of municipalities across urban areas.

Perspectives and Approaches

The numerous books, journal and popular writing on decentralised urban governance by KCS employed three concomitant perspectives – historical, legal and political.

He assigned a great importance to historical continuities in his analysis. For him, India’s modern conception of devolution had an antecedent in the nineteenth-century colonial rule. While colonial local self-government provided a forum for representation and practice, it was the provincial, state and central legislatures which controlled their powers, finances and functions. As KCS writes, “In the struggle for independence, urban growth was viewed usually in the frame of large metropolitan or industrial cities and all the want, squalor, slum growth and the blight they presented.”[i] Post-independence, the local government remained a lesser form of government with similar control exhibited by the centre and the state.[ii]

The second perspective was the defining of institutional powers and legislative domains of local governments, produced by the coalescence of law and legal jurisprudence. Although judgements delivered by High Courts and the Supreme Court were central to many of his own arguments; in many of his writings, he was critical of the views taken by the Courts.[iii] He believed, there were limits to which adjudication in the Courts of Law can help the process. Besides, “Courts prefer to dwell upon the letter of the law, rather than the spirit, however relevant it may be for a proper understanding and interpretation of the law. The remedy may not lie in the Court, but elsewhere.”[iv] That ‘elsewhere,’ lay in the polity and the process of people’s participation. He believed, that India’s decentralisation project cannot bypass the messiness of politics and people’s participation.[v] It is a genuine participative process, which is deeply contested that brings a strong and powerful elected government responsible for its successes and failures.

The Question of Governance

KCS were Secretary in the Ministry of Urban Development, when the 65th Constitutional Amendment Bill was brought to the Lok Sabha by the Rajiv Gandhi government. The 74th CAA, modelled on the Bill drafted earlier, opened up avenues of political participation by creating a new political class in big and small cities in India. “We thought we were on the cusp of a revolution,”[vi] said KCS in a public lecture in 2012. The optimism created made it clear that at the local level the elected representatives were going to demand an increasing share in the political domain. “As this demand turns more vocal and insistent, changes in the legal and administrative base of the Nagarpalikas will become inevitable.”[vii]

Twenty years later, the tides changed and there was a recognition that the 74th CAA though path breaking, remained a restrictive framework. His work on the metropolitan regions in India is revealing on the imaginative restrictions imposed by the Amendment. Referring to the metropolitan regions in India; an entity like the Mumbai Metropolitan region comprising of areas beyond the city corporation, to include both rural and urban, multi-municipal and non-municipal bodies, he argued that, metropolitan governance cannot be compartmentalised as rural or urban but there has to be strong intra-municipal coordination, inclusion of the rural local governments and a direct link between the various state and central ministries and the region. The idea that the problems of a ‘big’ city (and hence the region) are of, and restricted to, that city alone is flawed. Transport, water supply, garbage disposal, planned development are not city centred and extends beyond and have to consider the region as a whole. The “74th constitutional amendment of 1993 has failed to visualise the dynamics of large, complex urban formations,”[viii] he surmised. In his last published chapter, he is less charitable, “notwithstanding the initial objectives of enlarging the funnel of participation and providing for a wider system of directly elected representative bodies, in actual effect the amendment has failed to fulfil this objective.”[ix]

And here, then, lies the biggest contribution of KCS. By grappling with the question of the institutional architecture of urban governance, he posed profound questions on how should our cities grow. His body of scholarship leaves a reference point for us to ask – who should head our cities and what structures – elected or unelected should plan for our city? What forms of people’s participation do we imagine for our cities?

Within the wide canvas of indulging the urban, there has been a growth; positively so, on understanding the various facets of the subject. Housing, migration, economic geography, role of land, issues of livelihoods, urban systems, provision of services to urban populations especially the urban poor, urban violence and exclusion, and urban infrastructure have been investigated with great detail. Indeed, these studies provide a lens to subjects hitherto unexplored. Yet, the core question of urban governance, on which arguably, many of these are not only contingent but are greatly affected, has received limited attention over the years. Understandably, the term ‘urban governance’ is not homogenous, and cannot be thought to be panacea for all things bad. However, understanding and advocating greater autonomy to the city, a politically accountable leadership and an inclusive city government which becomes the forum for planning the city are the backbone on which exigencies of urban systems, livelihoods, service delivery tilt on.

His Legacy

In the summer of 2014, KCS was appointed the Chairman of the “Expert Committee on the New Capital for Andhra Pradesh” by the Ministry of Home Affairs. As the Committee was about to depart on a weeklong trip of the newly carved state, KCS mentioned his deteriorating health condition and a no travel dictum issued by the doctors. Nonetheless, constant updates were taken from the members even at wee hours and a few visits were made to Hyderabad. Notwithstanding a jump in his medical regime, the Committee submitted its report much before the deadline.

The report of the committee left the decision to the political leadership of Andhra Pradesh, reaffirming his fundamental belief that in a democracy it is the people who matter. He believed, that a democracy will come to terms not by an orderly progress of law but only by creating platforms where battle will be fought contests would be held. It is in a question, which KCS posed to a gathering in Mumbai that offers a peek into his legacy; “Before you think of becoming Shanghai, shouldn’t Mumbai start thinking of becoming Mumbai first? Like everywhere else, we can lay the contours of battle – It is that much easy for us to promulgate victory then join the battle. The reason why I am spending so much time is because I think we are capable, we shouldn’t be sterile. We need to think out of the box.”