Report on panel discussion titled “Global Food Crisis and Inflation”

A panel discussion titled “Global Food Crisis and Inflation” was organized by Anvesha on 31 May, 2008 at VP House (near Planning Commission, Government of India). Prof. Arjun Sengupta[1], the first speaker talked about speculation in commodity markets and rise in food prices at the world level. He spoke about the implications of price inflation in a global market economy. He said that it is difficult to change the current trend of inflation in food prices. He informed that bio-fuel production is extremely subsidized in the US, which is not the right kind of economic policy. Prices of crude oil are going up, he added. There is a need for the right kind of technology to increase agricultural production, he emphasized upon. He said that increase in investment in irrigation do not necessarily lead to higher agricultural production, unless farmers think that agriculture is a profitable venture. Although the Indian economy is growing but few are enjoying the benefits of economic growth. People at the marginal level are pushed into destitution level, he added. Majority of the poor are not gainfully employed. They do not have earning (purchasing) power, he informed. Prof. Sengupta said that there is need to look at how to increase employment. He said that employment has definitely increased in the unorganized sector but there is a need to think about job security. He said that there are different methods to calculate unemployment. It is essential to look at whether people employed in the unorganized sector get minimum wages. There is need to consider about ‘gainful’ employment. The process of economic growth is highly unequal. There is need for industrialization, which is job oriented. It is required to have a relook at: employment, credit, technology and investment policies. Social security should be immediately provided to the poor. Small and marginal farmers who constitute a major portion of the agricultural workforce, should be provided a foothold. The Reserve Bank of India and the government do not have enough facts and figures on what amount of credit is actually provided to the poor, he said. The public distribution system (PDS) should look at the poorest of the poor. There is need for universalisation of the PDS, he claimed.

Mr. Prabir Purakayastha[2] said that there is a serious problem associated with R & D at CSIR and ICAR.

Prof. Abhijit Sen[3], second speaker said that the prices are not going to come down. One has to look historically at the inflationary trend. He said that INR 200,000 crore is the loss to the Indian economy due to rise in international prices of crude. Fertilizer prices are going to increase due to rise in crude prices. There will be trade-off between subsidies (for keeping prices down) and rise in administered prices in India. Food prices increase is not a big issue in India, as compared to the world level. Both WPI and retail prices of food have increased. Food prices at the world level are rising sharply compared to India. There is crisis with global capitalism. World capitalism has also seen bubble burst in early 2000s. India and China are growing faster since last 4 years. So their growth is not leading to inflation, which was being alleged by President Bush. In the US, majority of the people believe that speculation is leading to inflation, he added by referring to George Soros. He asked for rethinking on saving oil and fertilizer. He asked for reducing the number of cars on roads. He asked for a good public transport system, which can save petroleum usage. He said that India has enough wheat stock presently, which can be distributed via the PDS. There is a need to oppose targeted PDS and accept universal PDS. There is also a need to increase the minimum support price (MSP) of paddy, said Prof. Sen. Fiscal discipline should not lead to contraction in expenditure on important programmes like National Rural Employment Guaranty Act (NREGA). While the Sixth Pay Commission is providing huge salary increase to non-poor people, enough is not done for programmes like NREGA which serves the poor.

The third speaker Sitaram Yechury[4] asked the question how should see inclusive growth. He said that neo-liberal policy is deflationary in nature, which allows for speculation. Economic inequalities are rising due to the current economic policies, which are being pursued. There is jobless growth being faced by India, he said. He asked for looking at global financial capital flows. There is a need for looking at trading in derivatives (from the website: www.bis.org). He asked: If NT Rama Rao government in Andhra Pradesh can provide rice at Rs. 2/- per kg, then why the same can’t be done by the present UPA government. There is a need to provide social security to the poor, he added. He said that the windfall profit earned by Reliance on gas production from Andhra Pradesh’s Godavari delta region needs to be taxed. Government should provide helping hand to the poor and not the companies, whose owners are rich. There is a need to check the conspicuous consumption practices of the big industrialists. He said that in between 1996-2004, India faced stagnation in agriculture. After that agricultural production has gone up. There are uncertainties in a globalised economy. The government should not lose its public sector units, he emphasized. He said that India should have enough buffer stock. Organized sector rely upon capital-intensive technology. So he asked for labour-intensive technology, which can provide jobs.

After a brief consultation among the speakers and the audience, the panel discussion ended.

[1] Prof. Arjun Sengupta is a former professor at the School of International Studies, Jawaharlal Nehru University, and currently an adjunct professor at the Harvard School of Public Health and Chairman of the Center for Development and Human Rights in New Delhi. He is the former UN Independent Expert on the Right to Development and current Independent Expert on Human Rights and Extreme Poverty. He is also the Co-Director, with Professor Stephen Marks, of the Right to Development Project at the François-Xavier Bagnoud (FXB) Center at The Harvard School of Public Health. Professor Sengupta has held numerous positions of high office in the Government of India. In the 1980s he was Economic Advisor to the Prime Minister of India. Subsequently, he was an Executive Director of the IMF in Washington DC, and India's Ambassador to the European Union. In his capacity as Independent Expert on the Right to Development, Dr. Sengupta reported to the Open-Ended Working Group on the Right to Development at each of its sessions on the current state of progress in the implementation of the right to development as a basis for a focused discussion, taking into account, inter alia, the deliberations and suggestions of the Working Group.

[2] He is from Delhi Science Forum (www.delhiscienceforum.net).

[3] Prof. Abhijit Sen has a Ph.D. in Economics from the University of Cambridge. He has joined Planning Commission on leave as Professor of Economics in Jawaharlal Nehru University. He earlier held teaching posts at the Universities of Sussex, Oxford and Cambridge and is currently on the Senate/Executive Committees of University of Delhi, IIT (Delhi) and National Centre for Agricultural Policy. In the past, Prof. Sen has been on a number of official Commissions/Committees; including: Chairman, High level Committee on Long Term Grain Policy, Ministry of Consumer Affairs, Food and Public Distribution, Government of India, 2000-02 Chairman, Commission for Agricultural Costs and Prices, Govt. of India 1997-2000 Member, State Planning Boards of West Bengal and Tripura Chairman, Tenth Plan Subgroup on Agricultural Economics and Rural Development, Planning Commission, government of India, 2001 Member, Prime Minister's Task Force on Agriculture and WTO, Government of India, 2000-01 Member, Expert Committee on Rural Credit, NABARD, 1999-01 Prof. Sen has also been Adviser/Consultant with International organisations, such as the United Nations Development Programme, New York; International Labour Organisation, Geneva; Food and Agricultural Organisation of the United Nations, Rome; OECD Development Centre, Paris; the UN University World Institute of Development Research, Helsinki; International Fund for Agricultural Development, Rome; Asian Development Bank, Manila. Prof. Sen has authored /Co-authored more than 30 papers in the areas of: Agriculture, Employment, Economic Reforms and Poverty

[4] Sitaram Yechury was born on August 12, 1952. After school education in Hyderabad, Andhra Pradesh, he had to move to Delhi due to disruption of academic life as a result of the separate Telengana movement in 1969. At Delhi, in 1970 he completed Higher Secondary (one Year Course) standing first in the All India merit list. In 1973, he completed B.A.(Hons) in Economics, first class, from St. Stephen's College, Delhi University. In 1975, he completed M.A., first class, in Economics, from Jawaharlal Nehru University (JNU), Delhi. Subsequently, he joined JNU for a Ph.D. degree which he could not complete due to his arrest during Emergency. He joined Students Federation of India (SFI) in 1974, while at JNU. He joined the CPI (M) in 1975. He was underground for sometime, organising resistance to Emergency, before his arrest in 1975. After Emergency, he was elected as President of JNU Students' Union thrice during one year (1977-78). In 1978, he was elected as SFI's All India Joint Secretary. He left SFI as its President in 1986. In 1984, he was invited to the Central Committee of the CPI (M). He was elected to the Central Committee in the CPI (M) XII Congress in 1985, to the Central Secretariat at the XIII Congress in 1988 and to the Polit Bureau at the XIV Congress in 1992. He is currently a member of the Polit Bureau, Head of the International Department and Editor of the CPI (M) Central Weekly, Peoples' Democracy.

Report Review: World Development Report 2008- Agriculture for Development

Introduction
The World Development Report 2008- Agriculture for Development is being prepared under the guidance of Francois Bourguignon in collaboration with the Sustainable Development Network. Team members for the WDR 2008 are: Derek Byerlee and Alain de Janvry, Irina I. Klytchnikova, Elisabeth Sadoulet, M. Paula Savanti, and Robert Townsend. The team was assisted by Harold Alderman, Beatriz Avalos-Sartorio, Julio Berdegue, Regina Birner, Lynn Brown, Luc Christiaensen, Klaus Deininger, Peter Hazell, Karen Macours, Michael Carter, Marie-Helene Collion, Michael Morris, and Dina Umali-Deininger, all of whom contributed to drafting parts of the Report, as well as Noora Aberman, Corinna Hawkes, Jorge Aguero, Shahrooz Badkoubei, Sarah Baird, Leandre Bassole, Tidiane Kinda, Melissa Klink, Claudio Montenegro, Eija Pehu, Catherine Ragasa, and Antti Seelaff. The WDR 2008 has 11 chapters namely: Chapter 1: Growth and poverty reduction in agriculture’s three worlds; Chapter 2: Agriculture’s performance, diversity, and uncertainties; Chapter 3: Rural households and their pathways out of poverty; Chapter 4: Realising gains from trade, price, and subsidy policy reforms; Chapter 5: Bringing agriculture to the market; Chapter 6: Supporting smallholder competitiveness through institutional innovations; Chapter 7: Innovating through science and technology; Chapter 8: Making agricultural systems more environmentally sustainable; Chapter 9: Moving beyond the farm; Chapter 10: Emerging national agendas for agriculture’s three worlds; and, Chapter 11: Strengthening governance, from local to global. The purpose behind coming out with the World Development Report 2008-Agriculture for Development is to place agriculture afresh at the centre of the development agenda, in a vastly different context of opportunities and challenges. The World Bank released a first draft of its latest World Development Report on 'Agriculture for Development' on 9 April, 2007. On 25 and 26 January, 2007, the World Bank thus held a civil society consultation on the WDR in Toronto, Canada. When the WDR's first draft was released, a subsequent e-Consultation process involving academics, national and sub-national government officials, small producer organisations, business sector and civil society groups was coordinated by Rimisp (Latin American Centre for Rural Development). The aim behind it was to identify any key issues missing from the report. The WDR's three-part structure addresses the following questions: 'why use agriculture for development', 'how to use agriculture for development' and 'how to formulate and implement tailored agriculture-for-development agendas?' The WDR Report 2008 thus calls upon action to bring out the smallholders from the poverty trap, in the Sub Sahara Africa, Latin America and Asia. There is call for addressing income disparities in transforming countries, which requires a comprehensive approach that pursues multiple pathways out of poverty shifting to high-value agriculture, decentralising non-farm economic activity to rural areas, and providing assistance to help move people out of agriculture. Instead of arguing for invisible hand (where market forces plays a decisive-role) as was dictated by Adam Smith, the WDR 2008 asks for the visible hand of the State for growth, poverty reduction and environmental services.

Message of WDR 2008
The Report emphasises upon market-based approach towards poverty reduction and agricultural growth. This however makes the recommendations contradictory since the same Report accepts market failures in the Southern nations. In this Report, agriculture comprises of crops, livestock, agroforestry and aquaculture. It does not include forestry and commercial capture fisheries since they require vastly different analyses. In agriculture-based countries, agriculture generates on average 29 percent of the gross domestic product (GDP) and employs 65 percent of the labour force. The Report accepts that domestic agricultural production is essential for food security. Agriculture is also accepted as a source of livelihood. The Report informs that the large decline in the number of rural poor (from 1,038 million in 1993 to 890 million in 2003) has been confined to East Asia and the Pacific. In South Asia and Sub-Saharan Africa, the number of rural poor has continued to rise and will likely exceed the number of urban poor until 2040. In this context, it is essential to see the debate around poverty measurement in India. The Report categorises countries into: agriculture-based countries, transforming countries and urbanised countries. It says that China and India moved over the evolutionary paths from the agriculture-based to transforming group over the last 20 years. WDR 2008 says that in the transforming economies, reallocation of labour out of agriculture is typically lagging. The Report do not touch upon the issue whether movement of labour from agriculture to non-agriculture is happening due to push factor or pull factor. The Report could have thrown more light upon the issue of disguised unemployment. Land reform can promote small holder entry into the market, reduce inequalities in land distribution, increase efficiency, and be organised in ways that recognize women's rights. Population pressure together with declining farm size and water scarcity are major challenges in many parts of Asia, the WDR 2008 says. The Reports says that land markets, particularly rental markets, can raise productivity, help households diversify their incomes, and facilitate exit from agriculture. However, whether such an exit of smallholders would result in the entry of corporate sector into agriculture, which is viable and profitable needs to be asked and understood. While land and water are critical assets in rural areas, education is often the most valuable asset for rural people to pursue opportunities in the new agriculture, obtain skilled jobs, start businesses in the rural non-farm economy, and migrate successfully, the WDR 2008 accepts. The broad policy recommendations provided by WDR 2008 are: a. Improve price incentives and increase the quality and quantity of public investment; b. Make market work better; c. Improve access to financial services and reduce exposure to uninsured risks; d. Enhance the performance of producer organisations; e. Promote innovation through science and technology; and, f. Make agriculture more sustainable and a provider of environmental services. The Report says that liberalization of imports of food staples can also be pro-poor because often the largest number of poor, including small holders are net food buyers. But many poor net sellers (sometimes the largest group of poor) will lose, and specific programmes tailored to country-specific circumstances will be needed to ease the transition to new market realities. The Report also throws light upon the Doha Round of trade negotiations and the trade related distortions due to subsidies provided by both the Southern and the Northern nations. However, putting the entire blame of trade related distortions on Southern nations, would be unwanted. The Report asks for investments in infrastructure, promoting commodity exchanges, market information systems based on rural radio and short messaging systems, warehouse receipts, and market-based risk management tools. But how can this be done without the active participation of the State, NGOs (non-government organisations), CSOs (civil society organisations) and farmers' collective and trade unions, needs to be pondered upon. Hence the WDR 2008 rightly argues for decentralisation and participatory governance. However, the Report donot say whether that will be political or apolitical in nature. The Report informs that producer organisations' effectiveness is frequently constrained by legal restrictions, low managerial capacity, elite capture, exclusion of the poor, and failure to be recognized as full partners by the state. While investment in R&D tripled in China and India over the last 20 years, it increased by barely a fifth in Sub-Saharan Africa. According to some critics, the Report over-emphasizes upon macroeconomic stabilisation policies to be pursued in Sub Saharan Africa. The Report accepts that investments in biotechnology, which is concentrated in the private sector and driven by commercial interests, have had limited impacts on small holder productivity in the developing world. In this respect, the issues (such as biodiversity, biopiracy, bioethics) related to GMOs (genetically modified organisms) too have been discussed. The Report informs that agricultural intensification has resulted in reduction in biodiversity, mismanagement of irrigation water, agro-chemical pollution, health costs, deaths from pesticide poisoning, soil erosion, spread of animal diseases like avian influenza, desertification etc. Although green-revolution has become a sort of cult term for agri-scientists, economists and policy-makers, but little thought is given on the adverse impact of green-revolution on environment and social structure in countries from South Asia and elsewhere. The WDR 2008 in this respect rightly points out the problems associated with agriculture. Developing country agriculture and deforestation are major sources of greenhouse gas emissions, the WDR 2008 says. There is also discussion on the pros and cons of biofuel production in countries like Brazil, the USA etc. The Report asks for decentralized environment which can address the following objectives: a.) increase access to markets and promote efficient value chains; b.) enhance smallholder competitiveness and facilitate market entry; c.) improve livelihoods in subsistence farming and low skill rural occupations; and, d.) increase employment in agriculture and the rural non-farm economy, and enhance skills. The Report asks for recognizing the often-dominant role of women as farmers, agro-processors, and traders in local markets. The Report asks for linking small holders to modern food markets. The state has a role in market development (in the backdrop of 'market failures')-providing core public goods, improving the investment climate for the private sector-and in better natural resources management by introducing incentives and regulations.

Conclusion
Although the WDR Report 2008 takes note of the problems faced by the poor, still it calls upon agricultural reforms in the Southern nations. The moot question is whether such reforms would include measures like removal of ceiling on land possessed, which can make the entry of corporates and MNCs easier, or poverty reduction measures like direct cash transfers to poor and landless, more allocation of budgets for food-for-work schemes etc. The Report misses out on traditional farming practices, importance of food banks for not only ensuring food security but which serves as gene banks, collection, preservation and genetic mapping of indigenous varieties of seeds, role of agriculture as a supplier of important herbal and medicinal products etc. Although the WDR focuses on the importance of decentralisation, but little is mentioned about the decay of old State institutions which had historical importance such as the rationing system (public distribution system), Indian Council of Agricultural Research (ICAR), state agricultural universities etc. Renewal and revival of such institutions can provide boost to the agricultural scenario in the Indian context. The WDR 2008 also misses out on the issue of farmers' suicides as had been happening in different Indian states. But altogether the WDR 2008 is welcome and much-awaited document which needs to be read by policy makers, economists and general readers for critical appraisal.

Indian Telecentre Forum 2007

Introduction

The present write-up on Telecentre Tales would cover the discussions and suggestions that came up during Indian Telecentre Forum of the eIndia 2007 Conference, which was held in Hotel Taj Palace (New Delhi, India), from 31 July 2007 to 2 August, 2007. Ms. Rumi Mallick from Centre for Science, Development and Media Studies (CSDMS), Noida (India) introduced the Indian Telecentre Forum, 2007. She informed that it was for the second time, Indian Telecentre Forum, a part of the eIndia Conference, would be taking stock of the telecentre movement in India and elsewhere. She said that the telecentre forum discussion would focus on Government of India's CSCs (Common Service Centres) scheme, and the other telecentre initiatives in the country. The objectives of the Indian Telecentre Forum is to raise awareness about the growing telecentre movement in general, and India in particular; raise key issues and challenges of telecentres; take up the recommendations of the current deliberation to the policy-makers for appropriate policy changes and build a community of practices (CoP) for knowledge-sharing and capacity-building.

July 31, 2007
Reviewing the emerging telecentre ecosystem

The first session of the Telecentre Forum of e-India Conference was chaired by Dr Srinivasan Ramakrishnan, Director General C-DAC, Pune. He informed that a lot of projects pertaining to telecentres in the ground are running on pilot basis. An entire gamut of factors determine the success of telecentres which include: infrastructure, content of portals, language of the content provided etc. He said that revolution in Information Technology has captured the imagination of people. There are very successful case studies. Nowadays, non-government organisations (NGOs) too are working together with the private sector. The Indian Telecentre Forum is a space which helps one to listen to various case studies. Y.S. Kim, e-Government Advisor, NITC, Government of Nepal (Republic of Korea), was the first speaker at the first session on telecentre. He informed that he has worked for 3 years in Nepal in the area of ICTs learning from rural Korea. Korea has good broadband connectivity. In rural areas of Korea, there still exists digital divide. Budget related to Information Technology is important. Korea has made huge investment on IT. In every village, investment on IT has been made. The budget for IT comes from the central and the local government. Information content is important since it generates income for people.

Dr. Baseerhamad Shadrach (Shaddy), Senior Programme officer, International Development Research Centre, New Delhi, said that his organisation was the one which introduced the term 'telecentre ecosystem'. Shaddy said that there are four key concepts to understand telecentres—Actor, Action, Actant and Tool. He added that the term ecosystem is related to tools. He reminded that IDRC funded telecentres for 20 years (the first generation telecentres). But 2-3 years back IDRC realised that telecentres cannot be funded in isolation. IDRC realised that for funding the second generation telecentres, there is need for investment in telecentre ecosystem. While explaining the term 'action', Shaddy said that 'action' in telecentre means connecting source (supply) with demand or vice-versa. While explaining the term 'actor', he said that actor is the telecentre manager. It should be ensured that the telecentre manager is not isolated. 'Actant' (although there is no such term in the dictionary) has been defined by Shaddy, as the people on which the act is acted upon. It basically refers to the community. The term 'Tool' was defined by Shaddy as the telecentre itself. The 'Tool' can be the computer, community radio or mobile handset. The answer lies with the community, on what should be termed as the tool. Balasundaram Muthukumara, Project Executer, Dhan Foundation who was the third speaker in the first session on 31 July, 2007 talked about Thagavalagam Telecentre movement. He informed that Dhan Foundation is a professional development organisation, which is working in India for the upliftment of the poor communities. He added that Thagavalagam telecentres are clustered under 15 hubs. The telecentres are supported by Dhan Foundation, ISRO and CAPART. He said that there are different wireless-based technologies in order to connect the telecentres such as CorDECT technology, and 802.16 Pre WiMax Technology. Offline services are offered by the telecentres in the areas like: computer education, e-School, job-related works, digital photography, Photo 2 CD services, Infotainment, functional literacy, agriculture, animal husbandry, health, gender, microfinance, insurance, adult literacy, fisheries, etc. Dr. Subarna Shakya, Executive Director, NITC, Nepal was the next speaker. He informed about school telecentres in Nepal which are located at the villages. Regarding the school telecentre, there was a survey study of Government telecentres in 2005. Results indicated that 80 percent of the telecentres were not sustainable. Majority of the community members including the students could not afford services offered at the telecentres. The long-term benefits of telecentres are: increased literacy rate; ICT driven education and ICT for village development. The short-term benefits of telecentres are: decreased drop out rate among students; increased enrollment rate among students; students can become part of the Information Revolution after training, etc. Sandeep Kaur, Researcher, P.S.G. College of Arts and Science, Coimbatore, was the fifth speaker. Her presentation cross-checked whether e-Governance was a hype or reality. The presentation focused on the potential challenges on implementing e-Governance in Tamil Nadu to serve the marginalised populace via the RASI kiosks, and the significance of kiosks in this respect. Her presentation was an attempt to examine the significance of kiosk development in the context of e-Government policies through a case study on RASI Kiosks implemented in Melur district in the state of Tamil Nadu. Though the e-Government services were received with great enthusiasm by rural communities since its inception in November 2001, the project failed to sustain and came to an end by December 2002 while some of the private services sustained. To have greater future success, policymakers and public IT managers should pay close attention to long-term business planning, strategic management, and stakeholder partnership in future kiosk development and similar e-Government projects, as per Sandeep Kaur. The final speaker of the day was Ahmad MM Eisa, Chairman of GDCO, Sudan. He informed that Gedaref Digital City has community telecentres equipped with a high technical facilities. It is the first digital city in Sudan. He informed about the partnership between the great people of Eindhoven represented by digital city of Eindhoven (DSE-Netherlands- Ben Waumans and the Board of Directors) and Gedaref community which is represented by Gedaref Digital City (GDCO). He said that the objective of GDCO is to develop the community by using Information Technology. The goals are to enable the community to reach and cope with the electronic era, capacity building of the community, and help the society have their voice heard, and their memory activated for utilisation and documentation for the state. He explained how the GDCO is helping the disabled. He said that disabled individuals are still excluded from many areas of life including information technologies (IT). GDCO is helping the disabled in the areas of IT and ICTs because ICT training is an important key qualification. Most of the disabled are very poor. Disabled are considered a useless community and no one care about them. Usage of ICTs is not part of Sudanese culture. However, imparting ICTs training can make the disabled to be self dependent and help their families. There is need for the integration of disabled in the community. There is also the need for fighting poverty through ICT, as per Ahmad. Because of GDCO's efforts, disabled are using ICTs for communications (chatting and emailing) instead of using sign languages. GDCO established telecentres for them which help both the disabled (by providing them employment opportunities) and the community (training and capacity building). The main challenges before GDCO are: lack of strategic and executable plans with clear time-bound targets; poor infrastructure especially power supply, high cost of ICT equipment, poorly designed schools' capacity and curriculum, lack of community involvement, awareness and interaction, unavailability of funding and non-usage of Internet (which is part of Sudanese culture).

August 1, 2007

CSC Programme: Sharing visions for shared access

S. Abbasi, Sr.Director, Ministry of Communications and Information Technology, GoI, chaired the first session held on 1 August 2007. He informed that private sectors are going for the CSCs scheme for tapping the rural market, despite agriculture contributing a lower proportion to the gross domestic product (GDP). He said that in the recent years, the impact of policies on CSCs scheme has been noticed. In the next 2-3 years, reliable broadband connectivity would be seen. R.K. Maiti, Joint Secretary, Department of PR&RD, West Bengal, informed that the CSCs scheme in West Bengal has been termed as Tathya Mitra. West Bengal has to establish 6,797 rural CSCs, he added. SREI Sahaj e-Village Ltd., WIPRO, Reliance Communications, and Samtec Technologies were elected through open bidding. Objective of ICT policy are: economic development, improving quality of life, ensuring good governance and promote high internal efficiency. The letter of intent has been issued on 2nd March, 2007 and signing of MSA took place on 5th April, 2007 with SREI and on 7th May, 2007 with Reliance. Rural West Bengal has been divided into 8 zones—two zones have been awarded to Reliance and 6 zones have been awarded to SREI infrastructure. Main areas to be targeted under MMP of NeGP are: Land and Land Reforms department, social welfare, agriculture and allied activities, transport, police, education, registration, etc. Other schemers covered for e-Governance are: e-Health, e-Medicine. He said that eliminating middle-men is the need of the day. Kshatrapati Shivaji, Secretary IT, Government of Maharashtra, the next speaker, said that ICTs has brought revolutionary changes. ICTs has blurred geographical barriers, economic barriers, and is an effective instrument in globalisation. Virtual world has taken over the real world. Places where there is no infrastructure can be reached out through ICTs. CSCs will help in economic development. He informed that Maharashtra has its own SETU programme. There exists Mahanet in Maharashtra, which provides grid all over the state. Upgradation of district headquarters will take place via SWAN. A roadmap for a period of 3 years has been prepared for Maharashtra. New projects are planned to be started on pilot basis which can be replicated. Capacity-building of Department of Information Technology (DIT) is needed. In Maharashtra, SCAs will go for bidding in 6 different places, he added. 7,285 CSCs will come up in Maharashtra, and they will be integrated. The CSCs will be opened in the gram panchayat premises. In Baramati, IL&FS has started a pilot project on CSCs from January, 2007 onwards.

V.S. Kundu, Special Secretary IT, Haryana was the third speaker. He said that e-Governance revolution is just around the corner. The time is ripe for e-Governance because e-Government measures are coming into existence. A lot of technological solutions are available. Citizens and government are becoming more aware about e-Governance. People have realised that e-Governance improves efficiency and saves time. Even 'babus' and 'clerks' have changed their attitude towards e-Governance. A lot of help is coming from the Right to Information Act. CSCs scheme have been prepared carefully under the public private partnership (PPP) mode to make it successful. Sustainability is assured through B2B services. Private players cannot provide neutral playing field to their competitors. In Haryana, flexibilities were given to SCAs to design the B2C services. In Haryana, SCAs were appointed on the basis of revenue-division. 3iInfotech is working in Gurgaon. Hughes Network Systems is working in Rohtak. 1,159 rural CSCs have come up in rural Haryana and 212 CSCs have come up in urban areas of Haryana. Some of the CSCs are already operating. The mandate is to make 40 percent of CSCs workable by October, 2007. SCAs believe that the target will be met earlier. The real challenge is readiness of G2C services. The SCAs will identify the VLEs. In 3 out of 4 divisions of Haryana, CSCs are operating. There are 6 CSCs in Ambala, 1 in Hissar, and more than 40 in Rohtak. In Gurgaon, sample centres would be coming up. Navin Kumar, Principal Secretary, IT, Government of Bihar, said that CSCs scheme is about government's initiative to provide web-enabled services to citizens. There are critical areas such as: SWAN, SCAs and CSCs. He informed that Bihar has 8,463 panchayats. So one CSC in each panchayat is envisioned to be established. For 8 of the 9 divisions, SCAs have been identified. Apart from SREI, there are two more players. The MSA is expected to be signed in the month of August, 2007. He informed about kisan soochna kendras run by Jai Kisan in Uttarakhand. He informed that SCAs will take up the onus to set up infrastructure, by partnering with VLEs. But no roll-out of CSCs has taken place in Bihar.

Pranav Roach, President, Hughes Network Systems India, said that in 2000, the IT scenario was far from being fair. The IT policy of 1999 was not conducive for the growth of the IT industry. In India, there are 200 million mobile users, but voice connectivity is missing. There are some futuristic application. The success of the IT industry can affect the CSCs scheme. PC penetration is low in India. There are only 20 million PCs for a population of 1.1 billion people. Availability of online connectivity device for serious applications is negligible in India. The vital issue is what type of services would be delivered by the private players. There is excessive optimism about the effective implementation of CSCs scheme. The critical factor is policy framework. The type of business and revenue sharing model chosen would determine the fate of the sustainability of CSCs. For inclusive growth, access, community infrastructure is required along with broadband connectivity. The ecosystems will be shaped by government policy. In Haryana, there are 1,500 telecentres which are working outside the purview of CSCs scheme. In the case of B2C services, one telecentre located in a developed area can earn a revenue of INR 20,000 to 25,000. People are now ready to use IT and ICT applications. CSC Programme: Stocktaking on key opportunities and challengesAruna Sundararajan, CEO, CSC programme, IL & FS, New Delhi chaired the second session held on 1 August, 2007. R.P. Pal, IT Secretary, Government of Goa, was the first speaker in this session. He informed that Goa performed well in areas like: quality of life, health and infrastructure, apart from e-Governance. Optical fibres have been laid in all talukas. Government would be getting revenue under the PPP mode of CSCs scheme. In 2002, Goa set up 13 experimental CSCs, which are called Mahiti Ghars. 10 services are provided through Mahiti Ghars, which include land records, licenses, etc. Regulating the pricing of the services being provided is essential. When more services are offered, the prices charged should go down. For broadband network, end-users would be charged. Currently, the bandwidth provided is sufficient for business transaction in Goa. Ravi Kumar, Executive Director, Alternative for India Development, Chennai, Tamil Nadu, said that the programmes of the Government of India should target the poor. He informed that his organisation is working for more than 25 years. He took the case study of Jharkhand. He informed that his organisation provides a lot of services like basic education, health services, opportunities for livelihood for the poor etc. CSCs scheme is a convergent programme. There are 600 panchayats with 3,000 villages with a population of 3 million in Jharkhand. CSCs uses the power of ICTs to reach out to the poor. The approach of CSCs scheme should be bottom-up and not top-down. CSCs should be community-driven. He explained about the problem of political extremism, which is affecting the implementation of the CSCs scheme in Jharkhand. Mass migration and hunger related deaths take place in Jharkhand. In the last 30 years, no election has taken place for the panchayats. Decentralisation has not taken place in Jharkhand. Even district collectors are unaware of the Right to Information Act. They think that RTI Act is used for blackmailing bureaucrats. Although Jharkhand is resource-rich, but its people are poor. L.K. Tiwari, Additional Chief General Manager, MPDCL, Madhya Pradesh, said that SCAs have not been appointed in Madhya Pradesh. CSCs are functioning in some form or the other on an experimental basis in various states. ITC established e-Choupal in MP, under a special ordinance. ITC was allowed to procure food grain/crops directly from farmers and pay the 'mandi' tax directly to the government. He informed that the Indian Institute of Management, Ahmedabad has selected the transport department of MP for its study. The process of issuing driving license is completely computerised in MP. There is no manual processing of Treasury Bills. Srinivas Tadigadapa, Head South Asia, World Ahead Programme, Intel, spoke about the problem of power shortage in rural India. He said that last mile connectivity in rural hinterland is required. D.C. Mishra, Senior Technical Director, NIC, New Delhi, was the last speaker. He said that CSCs can be helpful for entrepreneurs to enter the market. In the recent years automation of the government programmes have taken place. He informed that the NIC and Stanford University USA (Asia Pacific Research Centre in Stanford) study looked at adoption and consumption capacity of village-level community to use CSCs. He mentioned about some projects like Gyandoot, HPI community initiative, panchayat driven initiatives in Belandhar, Buddhi Kote, n-Logue, Akshaya project of Kerala and Warana Wired Village. If need arises, adequate changes need to be made in CSC logistics. He drew everyone's attention to: poor quality of web-content, digital divide, lack of proper business models, financial sustainability, technological sustainability, inadequate generation of capital, inadequate connectivity and 24x7 delivery modes. He said that laying of optical fibres can be helpful in getting broadband connectivity. It was also informed that CSC investment would range from INR 1.25-INR 3.00 lakh. Aruna Sundararajan during the question and answer session, said that the role of IL&FS is to support SCA as well as SDA. Once the bidding process is over, SCA has the responsibility to run and maintain the centre. IL&FS is working at national level and supporting DIT to bring some of the big service providers and give them platform. But still lots of challenges are there.

The key challenges are: a) Setting up infrastructure on the ground level; b) Delivery of services; and c) Sustainability of kiosks. She informed that there is no corporate involved in ground level. While replying to Vijay from iKisan, D.C. Mishra said that e-Governance services are meant for block panchayat, district panchayat and tehsil level. Other services, which can be provided are IGNOU, computer training and certificating programmes. There are departmental exams, online exams, which can be conducted through CSC centres. Content services and financial sustainability-making the connectionV. Balaji, Head of Knowledge Management and Sharing, ICRISAT chaired the third session. He asked Dr. Kentaro Toyama, Assistant Managing Director, Microsoft Research India to give his presentation. Dr. Kentaro Toyama quoted the definition of telcentres as PC equipped centre facilitating people for various services. These are some kind of services, which are computerised. He said that he is not focusing on those telecentres, which are fully funded by NGOs or the government, but on those telecentres, which are willing to work as a business. He visited around 50 kiosks, and culled out some key challenges and opportunities for e-Kiosks. To run PC based kiosks is a difficult proposition, and also it is challenging to garner funds. There are a long list of services for running the kiosk. There was mention of e-Seva, and Comat telecentres in Karnataka. The government their has closed these e-Services from their government offices and now it is these kiosks that are providing the e-Services. Eventually the customers are forced to go to these kiosks. Since these are private businesses, so they provide better services than traditional government offices. Also, there is much demand for kiosks as computer training centres.

Building partnership for outreach, scaling up and sustainability

Vikram Chand, Senior Public Sector Management Specialist, World Bank India, chaired the fourth session. The other discussants were: Gerolf Weigel, Head - ICT4D, Swiss Agency for Development and Cooperation (SDC), Berne, Switzerland; Rufina Fernandes, CEO, NASSCOM Foundation, Mumbai; Dr Harsha Liyanage, Managing Director - Fusion, Sarvodaya, Sri Lanka; Vikas Goswami, Lead-Corporate Social Responsi-bility, Microsoft, India; and Shahid Akbar, ICT Consultant, KATALYST, Bangladesh.

August 2, 2007

Addressing the access challenge

Ashis Sanyal, Sr. Director, Ministry of Communications and Information Technology, GoI, chaired the first session held on 2 August, 2007. He informed that BSNL has the mandate of reaching out to the rural areas for providing access points. He also reminded about the PCO model and Cyber Cafe model that spread in the entire India. R.N. Padukone, Sr. Deputy Director General (TEC), Ministry of Communications & IT, GoI (http://www.tec.gov.in/), was the first speaker in Telecentre Tales forum during the first session on 2nd August 2007. He spoke on the nationwide inter-operable broadband network for rural safety requirement. He said that 700 Mhz is the ideal spectrum for rural areas, as per the legislation in USA, which can cover a radius of 30 km. He also spoke about the creation of National Broadband Authority--NBA (a government body). The roles of NBA would be: a) Defining terrestrial coverage requirement; b) Defining network specifications; c) Defining user control and establish necessary protocols for user-priority and inter-operability; d) Defining reliability levels and work in the area of redundancy arrangements; e) Establishing capacity requirements; f) Developing procedures for setting additional capacity when necessary; g) Developing procedures to manage authorities relationship with commercial carrier licenses; h) Negotiating with equipment and service vendors; i) Coding at optimal pricing and packages; j) Looking at activation and deactivation units; k) Developing technological and production roadmap for public safety by keeping the network evergreen; l) Administering revenue stream including distribution of negative auction money; m) Looking at network usage charges. Sweta Jain, WIMAX/WIMESH Solutions Manager, Nortel Networks, India, made her presentation on government services reaching to rural masses through e-Governance. She informed that services of e-Governance can be in the area of G2B, G2C and G2G. She said that ICTs can also be provided to government employees. She informed that there exists spectral shortage in India. Masses can be reached via 5.8 and 2.4 Ghz. GSM, CDMA and WiMax, are needed to be placed in an inter-operable platform. She also talked on Orthogonal Frequency Divisional Multiple (OFDM), which comprises of High Speed Downing Packet Access (HSDPA), EVTO (for CDMA) and LTE (for 3G). OFDM provides spectral efficiency. WiMax can work on unlicensed bands. WiFi's range in rural areas is not good. WiMax has low operational cost. There are standards for WiMax which is 802.16 B. 270. Operators globally have deployed WiMax. She spoke on network infrastructure too. CPE is used for getting access to broadbands. K.B. Narayanan, Director, Head - Broadband Technology Division, Ministry of Communications and Information Technology, Government of India spoke on the status of broadband last mile accessibility. Affordability aspect was the focus of his presentation. He said that broadband supports high-speed data transfer. Broadband brings efficiency. Internet and broadband are catalysts for social and economic development. Broadband provides end-users with packet based digital voice, video and data services. Last mile bandwidth bottlenecks is solved via broadband. There is need for e-Inclusion of rural masses. In October 2004 Government of India announced the broadband policy, which specifies 256 Kbps as the minimum downloadable speed. The factors affecting broadband are: access cost, availability of local language content, customer premises equipment, value proposition, increasing demand for bandwidth application, making bandwidth available at reasonable cost etc. The effort made by Government of India are: a) Progressive reduction in call charges, national long distance bandwidth charges and international long-distance bandwidth charges; b) Reduction in customer premises equipment price; c) Local language content is rising; and d) More spectrum is available to service providers by releasing it for other captive uses. He informed that the Year 2007 has been announced the Year of the Broadband. Sandeep Gupta, Senior Engineering Manager, Product Marketing and Management, Motorola, informed that Motorola helps in provision of broadband services. Broadband can help in provision of e-governance services, tele-medicine services etc. which can transform the economy and society. The challenges are: a) Poor infrastructure; b) Poor infrastructure including power supply; c) Low affordability; and d) Lack of spectrum efficiency. Solutions are needed in the form of low Opex and Capex to provide affordable broadband connectivity. Measuring the social impacts of telecentresDuring the second session held on 2nd August 2007, Alok Bhargava, Chief Executive, Rural CSC Programme, IL&FS, explained that IL&FS is working with Government of India for implementation of CSCs scheme. There is need for looking at the outcomes of establishing CSCs.

Chetan Sharma Founder, Datamation Foundation Charitable Trust, New Delhi, informed that one-third of government services and two-third of private services are going to be delivered via telecentres and CSCs. Enormous changes have taken place in India. Sharma also mentioned about Bhoomi (Karnataka), Akshaya (Malappuram), Datamation Foundation, Warana Milk Co-operative, etc. He asked for the need of institutional sustainability, technological and infrastructural sustainability, and livelihood sustainability. Namrata Bali, General Secretary, SEWA, Ahmedabad, Gujarat, said that village knowledge centres, CSCs and CLCs are essential for rural development. She informed that SEWA has a membership of more than 10 lakh women. She mentioned about the presence of SHGs, mandals, DWCRA groups, co-operative societies in Gujarat. SEWA women members have created various indicators via focus group discussion on employment, income, nutrition, health (including reproductive health), micro-finance and asset-building, housing (including housing, sanitation, sewerage), women's empowerment and leadership, self-reliance, collective and social empowerment. Diaries are written by grass-root women on a daily basis which is reflective of the problems they face regularly pertaining to livelihood, poverty, income generation, etc. Ram Gopal, Partner, Byrraju Foundation, Hyderabad informed about his organisation and the functions it performs. He said that Byrraju Foundation works in 180 villages of 6 districts of Andhra Pradesh. It has implemented a project on rural bandwidth wireless connectivity project, which offers a basket of services by working with Media Lab Asia and United Nations Development Programme. Knowledge sharing for strengthening community and networks: How do we leverage the web 2.0?Ashwant Gnanavelu, Manager HR, DesiCrew Solutions, Chennai, Tamil Nadu, informed that DesiCrew established rural BPO centre apart from investing in infrastructure. DesiCrew offer backoffice services to clients. They are working in Tamil Nadu. 50 percent of DesiCrew's associates are girls. R.K. Maiti's (Jt Secretary, Department of PR and RE, West Bengal) presentation was on knowledge sharing. He said that Indian society must be knowledge-based, but it will have to be a knowledge-sharing society. He said that there is necessity of change in the mindset from one that works for the people to one that works with the people. He also asked for democratic institutions of service delivery. Ashis Sanyal also participated in this session which brought out some key recommendations to continue the dialogue.

What do we mean by Education for All?

The World Education Forum (26-28 April 2000, Dakar) adopted the Dakar Framework for Action, Education for All: Meeting Our Collective Commitments. In doing so, its participants reaffirmed the vision of the World Declaration on Education for All adopted ten years earlier (Jomtien, Thailand, 1990). The Dakar Framework for Action is based on the most extensive evaluation of education ever undertaken, the Education for All (EFA) 2000 Assessment. Each country assessed its progress towards the goals of Jomtien and reported its findings at six regional conferences in 1999 and 2000:
1. Sub-Saharan Conference on Education for All, Johannesburg, South Africa, 6-10 December, 1999;
2. Asia and Pacific Conference on the EFA 2000 Assessment Bangkok, Thailand, 17-20 January, 2000;
3. The Arab Regional Conference on EFA, Cairo, Egypt, 24-27, January 2000;
4. The Third Inter-Ministerial review Meeting of the E-9 Countries, Recife, Brazil, 31 January-2 February, 2000;
5. Conference on Education for All in Europe and North America, Warsaw, Poland, 6-8 February, 2000; and
6. Regional Education for All Conference in the Americas, Santo Domingo, Dominican Republic, 10-12 February 2000. The Dakar Framework for Action states that the heart of EFA lies at country level. It also affirms that no countries seriously committed to education for all will be
thwarted in their achievement of this goal by a lack of resource.

The Purpose
Article 1: Meeting Basic Learning Needs
Article 2: Shaping the Vision
Article 3: Universalizing Access and Promoting Equity
Article 4: Focusing on Learning
Article 5: Broadening the Means and Scope of Basic Education
Article 6: Enhancing the Environment for Learning

Article 7: Strengthening Partnerships

The Requirements
Article 8: Developing a Supportive Policy Context
Article 9: Mobilizing Resources
Article 10: Strengthening International Solidarity

Goals
1. Expanding and improving comprehensive early childhood care and education, especially for the most vulnerable and disadvantaged children
2. Ensuring that by 2015 all children, particularly girls, children in difficult circumstances and those belonging to ethnic minorities, have access to and complete free and compulsory primary education of good quality
3. Ensuring that the learning needs of all young people and adults are met through equitable access to appropriate learning and life skills programmes
4. Achieving a 50 percent improvement in levels of adult literacy by 2015, especially for women and equitable access to basic and continuing education for all adults
5. Eliminating gender disparities in primary and secondary education by 2005, and achieving gender equality in education by 2015, with a focus on ensuring girls’ full and equal access to and achievement in basic education of good quality
6. Improving every aspect of education, and ensuring their excellence so that recognized and measurable learning outcomes are achieved by all, especially in literacy, numeracy, and essential life skills

Strategy
1. Mobilize strong national and international political commitment political commitment for Education for All, develop national action plans and enhance significantly investment in basic education.
2. Promote EFA policies within a sustainable and well-integrated sector framework clearly linked to poverty elimination and development strategies.
3. Ensure the engagement and participation of civil society in the formulation, implementation and monitoring of strategies for educational development.
4. Develop responsive, participatory and accountable systems of educational governance and management.
5. Meet the needs of education systems affected by conflict, natural calamities and instability, and conduct educational programmes in ways that promote mutual understanding, peace and tolerance and that help toprevent violence and conflict.
6. Implement integrated strategies for gender equality in education that recognize the need for change in attitudes, values and practices.
7. Implement education programmes and actions to combat the HIV/ AIDS pandemic as a matter of urgency

8. Create safe, healthy, inclusive and equitably resourced educational environments conducive to excellence in learning, with clearly defined levels of achievement for all.
9. Enhance the status, morale and professionalism of teachers

10.Harness new information and communication technologies to help achieve

EFA goals
11.Systematically monitor progress toward EFA goals and strategies at the national, regional and international levels.
12.Build on existing mechanisms to accelerate progress towards Education for All.

Source:

Various UNESCO reports on EFA

Economic development and sectoral analysis

The economy of any modern nation comprises of three basic sectors, namely—primary sector, secondary sector and tertiary sector. The primary sector comprises of agricultural and allied activities. Economic activities such as fishing, forestry, horticulture, bee-keeping etc. can be put together under the heading of allied activities. Secondary sector mainly includes mining, industries and manufacturing. The services sector comprises of community, social and personal services, insurance, finance, banking, shipping and transport. All these sectors are inter-related; any imbalance or shock in one sector can produce repercussions in the other two sectors.

Development of an economy can be judged in terms of the sectoral contribution of each of these sectors to the nation’s total output and employment generated. In an underdeveloped economy, majority of the employment is generated by the primary sector. Also, primary sector holds a large share in the total output (or Gross National Product) produced. In the case of India and China 24.7% and 15.2% of the total GDP came from the agricultural sector, respectively. But in case of South Korea[1], only 4.4% of the GDP came from the agricultural sector during the year 2001.

Since most of the people are engaged in agriculture, so we find that land (area-wise) to man (population-wise) ratio is quite low in agriculture for the underdeveloped countries compared to the developed countries. In such a situation, if agricultural land is concentrated (owned by) in few hands, then this will cause landlessness to majority of the people. There will be widespread poverty with very low purchasing power in the hands of majority of the rural population. State intervention in such a situation becomes important—first of all, to carry out land reforms (redistribution of land to the poor landless and marginal labourers and peasants, either by purchasing land from the land rich section and selling it at subsidized rates to the land poor section, or by ‘radical land reforms’ as was carried out in some countries such as China, where State took away the land from the land rich section without paying any kind of economic compensation). One must know that fragmentation of land is a big problem among South Asian nations. Hence, sometimes it is said that land reforms can lead to lower output unless there is creation of land co-operatives or ‘communes’. But this is a difficult task. Formation of communes can fail if there is no trust among the land-owners. Countries where a majority of the population is engaged in agriculture are generally poor. But there are some exceptions such as Australia, New Zealand etc. Second of all, if land reforms were improperly implemented or could not be carried out, then the State can play a crucial role in the creation of the secondary sector (diversification), by investing in the secondary sector through deficit financing. This was done in the case of India during the 2nd and 3rd Five Year Plans based on the Mahalanobis model for industrialisation. However, the plans were criticised for neglecting the agricultural sector, which led to food insecurity and later led to the adoption of green revolution[2].

It becomes necessary to expand the secondary sector for the following reasons:

(i) Technological growth can take place in an economy which has a vibrant secondary sector. It is in the secondary sector where modern inputs such as fertilisers (chemical/ bio), pesticides (chemical/ bio) are manufactured, which are crucial inputs for modern agriculture.
(ii) The newly developed industrial sector will become a new arena for generating employment, which can reduce the pressure on agricultural land. This can help in modernizing agriculture thru mechanisation (like using tractors, electrical harvesters). Again introduction of machines and new technology will raise the productivity of labour in agriculture and hence the purchasing power.
(iii) The growth of the secondary sector is bound to be greater than that of the primary sector in the initial phase because of its comparative advantage in terms of technology. This will lift up the gross output and place the economy in a new steady state growth path. But if the agricultural sector fails to catch up with the growing demand for food grains coming from the growing industrial sector, then this will lead to inflationary tendencies in the economy.

After an economy is already into the modern phase, it is essential to give a thrust to the tertiary sector. There is a substantial amount of difference between the tertiary sector and the other two remaining sectors. In the tertiary sector, no tangible goods are produced. Tertiary sector do not produce anything but services. It is not involved directly in the production process but helps the production process itself by raising the efficiency/ productivity level and reducing transaction costs. Services are intangible goods; they themselves cannot be seen but their effects can be seen. For example, services of a doctor cannot be seen, but its effect can be seen when patient gets cured and starts working, thus contributing to the production of output. In today’s world, the most powerful economy is the one, which has a substantial share of the working population, engaged in the tertiary sector. Labour productivity is very much high in the tertiary sector thus leading to better emoluments of the workers employed in it. One reason behind this is the higher skill levels of the workers engaged in the tertiary sector. According to Simon Kuznets, when the secondary expands along with the growth of GDP during the earlier stage of growth of a developing economy, then income inequality starts rising.

All these do not add upto underestimating the role of the primary or more precisely the agricultural sector. Johnston and Mellor in their article ‘The Role of Agriculture in Economic Development’, published in 1961 in The American Economic Review, wrote about the relationship between industry and agriculture in the structural transformation of the modernizing economy. Agricultural development and productivity growth, they argued, not only provided surplus labour and food to the industrial sector, but also created demand for manufacturing sector output and became a source of foreign currency export earnings. Given the labour abundance and capital scarcity that characterised agriculture in many developing countries, they argued that growth could be achieved partly with the application of a rapid succession of labour-intensive, capital-saving innovations. So, instead of going for capital-intensive technology such as application of tractors, electrical harvesters, the developing countries should go for labour-intensive technology such as application of fertilisers, pesticides, hybrid rice (since all these needs more labour). So there are two types of technologies—labour intensive technology and capital intensive technology. Labour intensive technology can be applied in countries with high population density in agriculture (such as South Asian countries), and capital intensive technology needs to be applied in countries with scarce population density in agriculture (such as Western European countries). It has been argued that investment in rural infrastructure, extension and education systems, credit services, farmers' collective action programmes, input industries, and agricultural R & D (research and development) are essential to achieving agricultural sector growth.

Supply-side bottlenecks of the agricultural sector may put an obstacle on the growth of the industrial sector, because this particular sector not only provides ‘wage’ goods to the workers engaged in the industrial sector but is also a source of raw material. It is a fact that Great Britain had to rely on the supply of raw agricultural goods from India such as jute, cotton, indigo during the time of industrial revolution. Price inflation in agricultural goods in general and food grains in particular may begin when the industry starts expanding too fast thus creating demand for food, while the agricultural sector is failing to supply the growing demand. This will set the terms of trade in favour of the agricultural sector, which will be economically beneficial for the big land owning farmers who have the marketable surplus. The small and marginal farmers along with the agricultural labourers in the villages, and the industrial workers of the urban areas will face price inflation in food. Since a major portion of the worker’s budget/ income is spent on food as their marginal propensity to consume is very high vis-à-vis the capitalists/ industrialists, so food price inflation can have serious consequences. It can lead to cost-push inflation in case when industrial workers demand for an increase in the salary / remuneration through the formation of trade unions. Industrial growth may come to a halt since the profit maximising industrialist may think that it is in his/ her best interest, not to invest anymore because the labour costs are too high. It can also happen that capitalists then start moving towards more capital intensive technology. If a country depends on food processing industry and industries where agricultural goods are intensively used as raw material, then in such a case the unresponsiveness of the agricultural sector to the growing demand from the industrial sector may put an impediment on the growth of industry. In both the cases the government can take the following steps:

(i) Modernizing the agricultural sector through adoption of appropriate technology to overcome the supply bottlenecks in agriculture. Investment in R & D becomes pertinent during such times.
(ii) The government can import agricultural goods and food grains provided it has sufficient foreign exchange reserves.
(iii) The industrialists should change the composition of the production basket i.e. switch to producing goods, which requires capital-intensive technology.
(iv) The government can open up rationing system for the distribution of food to rural and urban working people at subsidised rates.

Inter-sectoral analysis of an economy is interesting as it helps us to see the economy in terms of structural changes. In the input-output analysis, we basically try to see the linkages between various sectors of the economy and consequently their relationship to the Gross Domestic Product (GDP). Inter-sectoral analysis becomes essential since all the sectors are not homogenous and the input intensities vary across different sectors and there are sub-sectors too, within each sector. Finally, centralised (socialistic) planning, mixed economic model/s, market based economic planning are just policy choices before any nation.
[1] In the case of S. Korea, there had been lot of investment on human capital formation.
[2] There is also the need to look at employment elasticity of the secondary and tertiary sectors, when the economy is growing.

The demon named ‘inflation’

During the last year or so, the global economy has seen various crises, and will no doubt see more, as have been predicted by numerous reports sponsored by the United Nations and the World Bank. It is feared that due to stagflation occurring in the United States along with the real estate crisis (sub prime crisis), with many of the export-oriented countries relying for its exports on the US, the growth rate of the world’s gross income/ product, would slow down in 2008. Doomsday economists, have alleged that this phenomenon is somewhat related to the crisis with the global capitalist order, where countries are much more interconnected and interdependent in terms of global finance capital and trade flows compared to the past because of the openness policies being adopted during the post-WTO era. The credit led economic growth of the US has come to a standstill in the backdrop of the so called subprime crisis—a phenomenon which took place due to economic short-sightedness and mismanagement, which led to lowering of the real value of assets and estate.[1] It is high-time to bid farewell to the defenders of free-market capitalism who could not even learn from events of the past such as the 1997 South-East Asian financial crisis, the bubble burst of 2001 at NASDAQ during the beginning days of dot-com era and the present sub-prime mortgage crisis in the United States when banks are unable to collect capital. Sub-prime mortgage loans are usually considered as risky in the present context. These loans are given to people with unstable incomes or low creditworthiness. These individuals borrowing loans are not financially sound enough to be given as loan when judged from the point of view of strict standards that should normally be followed by a bank or lending institution. It has been found that the crisis is spreading from sub-prime to prime mortgages, home equity loans, to commercial real estate, to unsecured consumer credit (credit cards, student loans, auto loans), to leveraged loans that financed reckless debt-laden leveraged buy outs, to municipal bonds, to industrial and commercial loans, to corporate bonds, to the derivative markets whose risk are indeterminate, etc. This time, however, the crisis began with the bursting of the United States housing bubble. One could thus see with open eyes a slowing US economy, high interest rates, unrealistic real estate prices, high level of inflation and rising oil tags together. All these have led to growth stagnation, job losses, low level of consumer spending, shortfall in creation of new jobs, and foreclosures and defaults by banks such as Lehman Brothers Holdings Inc. The stock markets all over the world too have been affected. It is high time that economists recognize the problem of crony capitalism which could be seen from the case studies of Enron, Arthur Andersen LLP et al.

Let us look at the figure above to check the trend in the WPI of selected commodities. Similarly, have a look at the next figure which provides the time trend of consumer price index in various South Asian countries.

During the past 3-4 months, both India and the rest of the world have experienced inflation, over which many of the incidents have cropped up such as food riots, political bashing of the government/s in power, abusing of the accountable institutions et al. The present article is intended to understanding the inflationary situation, academically. The monetarist school might relate the present inflationary trend to India’s rising foreign exchange reserves (see: table 1) and growth in money supply (see table 2). Hence, the obvious policy choices would be to go for sterilization, raise cash reserve ratio, raise interest rates etc. However, the Keynesian school might relate the inflationary trend with rising effective demand, which has been generated in the economy pertaining to India, with inadequate supply. In such a situation, the obvious policy choices would to build capacity of production by investing in infrastructure, increasing food production, banning of exports and reducing of duties, and tariff rates of those goods, which are facing inflationary buoyancy. However, all these measures can be looked critically. There exist arguments and counter-arguments among economists and social scientists’ regarding which measure is the appropriate one. It is also important to see whether the measure taken does not adversely affect economic growth, consumption, savings and investment both in the long and the short run.

One of the most amazing things about these global crises is that India’s economic growth and prospect would not be affected by it in the short-run due to its relative insulation in term of capital inflows (see table 3). Although many scholars around are more interested to provide answers to this new ‘discovery’ but the present article here would however look at a completely different story—the story of inflation, which has gripped India and the rest of the globe. According to standard economic theory, price-inflation not only affects the trade balance of a country (by creating competitive disadvantage), but also adversely impacts upon the distribution of income. Price inflation arising due to cost-push inflation (because of pressures for keeping the real wage rate same as before, by the trade unionists or working classes) can also lead to higher unemployment rates. In the case of India, one finds that the wholesale price index increased by 6.68 per cent between March 17, 2007 and March 15, 2008.[2] The wholesale price index on March 17, 2007 and March 15, 2008 were 209.6 and 223.6, respectively. Wholesale price index rose due to rise in prices of food articles. There was also rise in cost of living of agricultural and rural labourers.[3]

Factors,[4]that could have triggered or are responsible for this inflationary trend are:

a. India is dependent on imports of various commodities such as crude oil/ petroleum, oilseeds (edible) and pulses. Due to rise in crude oil prices to more than US $ 100 a barrel (in the past one year or so), the import bills of India have risen (see the figure above). But an economy, which continuously has to maintain its fiscal deficit vis-à-vis the gross domestic product (GDP) at a lower level, thanks to the Fiscal Responsibility and Budget Management Act 2003, the domestic price of the oil needs to be raised (without going for excessive subsidization). Under the FRBM Act, it was promised that fiscal deficit as percentage of GDP would be brought down to 3 per cent by the 2007-08 Budget, as part of fiscal disciple. Due to this, transportation cost has risen, and so one could observe a rise in prices of various commodities. The cost of fertilizers, which is made from ‘crude’, has also increased that led to price rise of food commodities (assuming farmers want to keep the profit margin for production the same as before, while facing rise in input costs).

b. The rise in prices of oilseeds and pulses could be because of low production of the same, domestically. Their productions have come down in the recent years, since the government is not eager to provide economic incentives to farmers in terms of higher minimum support prices (one should not forget to mention about Technology Mission on Oilseeds and Pulses)[5]. Hence, in order to meet the domestic demand, India relies increasingly on imports of oilseeds and pulses. One can mention here that opening up of the economy for cheaper imports, had also attracted criticisms and agitations by various farmers’ lobbies in the past.

c. In countries from Latin America, and in the US, a huge share of cereals and oilseeds are increasingly diverted to produce bio-fuels (an alternative to petroleum), for reducing their import dependence on petroleum particularly from the Gulf-region, for strategic reasons—both economic and ‘geo-political’. Some earlier thinkers had the idea that biofuel production would be environmentally and economically sustainable, and hence it is justified. But since a huge share of cereals/ foodgrains (like soyabean, corn, wheat) and oilseeds (including sugarcane) go for biofuel production (for energy requirements), without satisfying the existing consumption needs of the human population, so a mismatch is created between demand and supply (--a kind of shortage) that leads to inflation in these commodities. Moreover, biofuel production as a part of large-scale industrial production (which includes mono-cropping) has adversely affected biodiversity, soil health and fertility, and productivity of agriculture. All these factors have overall contributed to shortages (fall in supply vis-à-vis demand), that is leading to inflation. In this connection, one should also consider the adverse impact of ‘commercialization’ of Indian agriculture on food security.

d. In India and elsewhere, there had been change in the consumption pattern of the population. Compared to the past, the better-off sections of the Indian population now spend more share of their incomes for consuming meat, milk (and other dairy products), eggs etc, in the face of globalization (as part of changes in lifestyle) and increase in real income of a section of population. (One should not forget to mention Bennet’s law). But in order to grow and maintain livestock, a huge share of foodgrain and cereals now is being diverted, without satisfying the existing direct consumption need (as staple diet), in the backdrop of stagnant foodgrain and cereals production. So, this artificially created shortage has led to inflation in such food commodities.

e. Processed food is now more preferred (viewed as a part of commercialization of agriculture) since it adds value and provide better returns to the growers and the rest in the supply chain, and can be preserved for long. Processed food is also considered important for earning valuable foreign exchange via exports. Due to this, a vast share of foodgrain is diverted for consumption purposes of the elites (or goes as exports) without satisfying the existing consumption need of the domestic poorer sections (as staple diet). This created shortage can be another factor behind inflation.

f. Scientists have found that emission of green house gases (GHGs) has contributed to global warming and climate change, which adversely affects biodiversity and global food production. Perhaps, the current trend of inflation, is somewhat related to global warming, directly or indirectly.

g. A common argument among economists has been that agricultural productivity has gone down, and the initial push for green-revolution towards more production has come to an end. Green revolution, which initially centred on wheat and then on rice, has proven to be affecting soil health (due to over usage of chemical fertilizers, chemical pesticides et al), causing over-exploitation of resources, bringing down water-table etc, that affected productivity in the long-run. This ‘technological fatigue’ has been well-discussed within the circles of Indian economists. Agricultural productivity is also affected due to fall in the share of public investment in agriculture[6]. Institutional factors such as land reforms[7], tenancy reforms, creation of land banks, crop-insurance, better credit facilities etc. can also affect agricultural production and productivity. Some economists think that falling agricultural productivity can lead to inflationary trend due to shortages. A major question is whether rise in food prices is going to increase productive investment in agriculture (if and only if the rising economic returns/ gains due to price rise are going directly to the growers, who are eager to re-invest). Diversification of Indian agriculture although have raised returns to farmers/ growers, but one could also see that area under horticulture and floriculture have gone up along with falling area under cereals, that affected food self-sufficiency.

h. For taking advantage of the current rise in prices of food commodities, hoarders and agents engaged in black marketing have entered into various speculative malpractices. The rise in prices of important food articles in the short-run can be due to this particular phenomenon. Presence of too many middlemen between the growers and sellers may have also contributed to inflation. A certain section of economists feel that existence of multi-commodities exchange (MCX), NCEDX etc. has led to speculative behaviour among traders, thus leading to the present inflationary trend.

i. There exist a growing number of believers who argue that farming is no more profitable. So, farmers are increasingly switching towards other professions or occupations. Agricultural land is now increasingly sold for industrial purposes. One can thus point out that agricultural production, in this connection, is bound to slow down, without meeting the existing demand, thus leading to inflation.

j. Some have argued that the current inflationary pressures in food commodities could be due to breakdown of the existing public distribution system (in the era of globalization), and the (unnecessary) amendments made to the Essential Commodities Act, in 2000.[8]

k. Some of the countries, who are major exporters/ sellers of rice (like Thailand, Vietnam) and wheat in the global market have recently put curbs on their exports, in order to ensure their own food security, in the backdrop of global crisis in food grain production. This can create further shortage in food supply, thus leading to inflation.

Recently, the Government of India has undertaken certain steps to curtail inflationary pressure, which include:

i. Elimination of import duty on non-refined vegetable oils
ii. Ban on export of non-basmati rice
iii. Rise in the minimum export price of basmati rice

Inflation is not only an economic but a social and political problem as well. There is a lot of hue and cry currently about containing inflation in food articles. It is imperative for the government to curb this trend as soon as possible through a prudent mix of fiscal, monetary and trade policies and measures. There is also the need for ‘political will’ to see inflation as a menace, which can do ‘big’ damage to the economic growth, which India is currently facing. Policy-makers should also bear in mind that it is the poor who suffer the most due to inflation, particularly, when one could see the corrosion of the public distribution system in India. The rationing system in India in the past has overlooked the idea of providing coarse cereals like: bajra, maize etc., particularly to the poorer sections of the population.

[The present article has been written to disseminate information and not to hurt anybody. The views expressed and conclusions drawn in this article belong solely to the author. ]

Notes:
[1] Some of the earlier writings which can be mentioned here are: i. Jayati Ghosh and CP Chandrasekhar The Global Liquidity Paradox, March 2008, http://www.macroscan.com/fet/mar08/Global_Liquidity.pdf; ii. Jayati Ghosh, ‘Global Stagflation’, Frontline, Volume 25-Issue 07::Mar.29-Apr. 11, 2008, http://www.frontlineonnet.com/stories/20080411250704300.htm; iii. National Bureau of Economic Research, US Business Cycle Expansions and Contractions, http://www.nber.org/cycles/cyclesmain.html
[2] The present article has been written in the backdrop of a handful of farmers/ potato-growers committing suicides in West Bengal, a state from eastern part of India. These potato farmers, who borrowed from moneylenders (informal source) instead from the rural-banks/ co-operatives (formal source), spent nearly INR 250 to INR 300 per quintal for producing potato. However, due to excess production, the market price of potato has come down to INR 100 to INR 120 per quintal of potato. These farmers were afraid that they would not be able to cover the cost of producing potato, despite the Government of West Bengal’s promise of minimum support prices for potato that comes around INR 250 per quintal of potato. Hence they would be unable to repay back their loans to the moneylenders. Lack of proper marketing channels, lack of spending on innovation and R&D, and shortage of cold storage facilities have led to distress sale of potato by the farmers (from Burdwan district, etc.). Some have argued that government’s help and initiative would be inefficient, cumbersome and time consuming. There are allegations that only big farmers are getting cold storage facilities. It is pertinent to ask whether the farmers would have benefited had there been presence of contract farming in rural West Bengal. The situation would have been different, had these farmers who committed suicides had borrowed from rural banks/ co-operatives, that are supported by the government, given the fact that the Government of India in its 2007-08 Budget has promised a massive loan waiver scheme for small and marginal farmers (owning up to 2 hectares of cultivable land).
[3] India has also experienced rise in prices of steel. The competition policy of the Government of India is geared towards removing all forms of cartels and monopolistic practices as could be observed in product markets for rubber, steel, iron, cement et al.
[4] Some of the earlier writings which can be mentioned here are: Joachim von Brauer, The World Food Situation, Food Policy Report No. 18, December 2007, IFPRI, http://www.ifpri.org/pubs/fpr/pr18.pdf; Dipankar Dasgupta, Links in the food chain, The Telegraph, March 17, 2008, http://www.telegraphindia.com/1080317/jsp/opinion/story_9023814.jsp.
[5]Raising Minimum Support Price (MSP) or procurement price may not be the only policy choice to raise production as this can lead to buoyancy in price level, particularly, when the gap between MSP and prices at which commodities are sold via the rationing system goes up, with the policy-makers emphasizing upon reduction in subsidies on food.
[6] The need for public investment in irrigation (micro-irrigation, watershed management etc.) has been stressed upon by a number of economists, for raising agricultural productivity.
[7] In the context of land reforms, it is important to consider whether smaller farms are more productive compared to bigger ones in terms of return and profitability.
[8] The EC Act, 1955 gives powers to control production, supply, distribution etc. of essential commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices. Using the powers under the Act, various Ministries/Departments of the Central Government have issued Control Orders for regulating production/distribution/quality aspects/movement etc. pertaining to the commodities which are essential and administered by them